Cuomo Proposes a Lower Regional Greenhouse Gas Initiative Cap

I had intended to make my first post a description of what I hope to do at this website. However, I want to comment on an issue that has come up and have decided that an example of what I hope to do is better than a description.

On January 9, New York Governor Cuomo presented the 14th proposal of his 2017 State of the State: http://www.governor.ny.gov/news/governor-cuomo-presents-14th-proposal-2017-state-state-lower-regional-greenhouse-gas-initiative. He proposed lowering the Regional Greenhouse Gas Initiative (RGGI) Cap by 30% between 2020 and 2030. Let’s look at both sides of this issue.

Issue

The Regional Greenhouse Gas Initiative (https://www.rggi.org/) is a cooperative effort by nine Northeastern and Mid-Atlantic States to cap and reduce CO2 emissions from the power sector. Because emissions dropped much more than expected, the RGGI states revised and lowered the 2014 RGGI cap to 91 million short tons. The RGGI CO2 cap then declines 2.5 percent each year from 2015 to 2020. The current policy is that the cap will remain flat after that. Cuomo proposes to further reduce the cap from 78.2 million tons in 2020 to 75.1 million tons in 2021, declining to 54.6 million tons in 2030.
 

Cuomo’s Side of the Issue

According to the press release

In New York, RGGI has led to a 46 percent reduction in carbon emissions from affected power plants and a 90 percent reduction in coal-fired power generation. To date, New York State has generated close to $1 billion in RGGI proceeds, which help fund clean energy and emission reduction programs. Under the current policy, the RGGI cap remains consistent after 2020 and emissions remain flat region-wide. By reviewing the RGGI program and adjusting the cap to reflect the progress made in just a few short years, New York and neighboring states will continue to reduce emissions annually after 2020 and ensure that power sector emission reductions continue through 2030.

The Governor’s proposal to reduce RGGI’s cap an additional 30 percent between 2020 and 2030, builds upon Governor Cuomo’s landmark clean energy programs, including the Clean Energy Standard, established by the Governor in August 2016 to require 50 percent of New York’s electricity to come from renewable energy sources by 2030. An additional component of this plan includes capturing the carbon benefits of zero-emission nuclear power. 

Pragmatic Environmentalist Side of the Issue

While it is probably not fair to ask for supporting documentation for a press release, the Governor’s landmark clean energy programs have been remarkable for the lack of implementation information so developing a response is difficult. Nonetheless it is possible to show that the press release sound bite is at best, misleading. Consider this quote: “In New York, RGGI has led to a 46 percent reduction in carbon emissions from affected power plants and a 90 percent reduction in coal-fired power generation.” The implication is that were it not for RGGI these reductions would not have occurred.

The Environmental Energy Alliance of New York (EEANY) submitted a relevant white paper to RGGI on June 6, 2106 archived under the April 29 2016 stakeholder meeting section at https://www.rggi.org/design/2016-program-review/stakeholder-comments-2016. The white paper notes that there was a paper on this topic : Murray, Brian C., Maniloff, Peter T., Why Have Greenhouse Emissions in RGGI States Declined? An Econometric Attribution to Economic, Energy Market, and Policy Factors, Energy Economics (2015), doi:10.1016/j.eneco.2015.07.013. This paper concluded that “The analysis shows that after the introduction of RGGI in 2009 the region’s emissions would have been 24 percent higher without the program, accounting for about half of the region’s emissions reductions during that time”. The presentation further suggested that “The other half is due to recession, complementary environmental programs and lowered natural gas prices.”

There also was a relevant Congressional research service report Ramseur, Jonathan L., April 27, 2016: The Regional Greenhouse Gas Initiative: Lessons Learned and Issues for Congress, Congressional Research Service, 7-5700, R41836, The Regional Greenhouse Gas Initiative: Lessons Learned and Issues for Congress. There was no attempt to quantify the specific emissions impact but the author noted that

“Although actual emissions were ultimately well below the original emissions cap, the cap’s existence attached a price to the regulated entities’ CO2 emissions. Because the cap level was above actual emissions, the allowance price acted like an emissions fee or carbon tax. Although the cap likely had limited direct impact on the region’s power plant emissions, the revenues generated from the emission allowance sales likely had some impact on emission levels in the region.”

The White Paper includes an analysis that I prepared to quantify the change in emissions due to RGGI. I used data from EPA’s CAMD Data and Maps website to look at the changes in CO2 emissions in the RGGI states by fuel type. The analysis did not attempt to reconcile differences between RGGI and all the other programs in this database. Annual data were downloaded for the years 2006-2015 for the RGGI states for all programs. Non-RRGI affected units are included and some of the included units report only six months of the year so this is not an exact analysis. Nonetheless, these data can give us an idea of how RGGI emissions were reduced.

For this analysis (Table 1 in the white paper) the 2006-2008 data were averaged to establish a pre-RGGI baseline and the total and fuel-type specific annual emissions were subtracted from the baseline to get the reductions during the RGGI program. For the facilities in this dataset in 2015 there has been a 41 million ton reduction from the 127 million ton baseline or a 32% reduction. Note that coal and residual oil emissions dropped 57 million tons from the baseline of 85 million tons or 67%. Natural gas emissions increased 15 million tons and other solids (mostly wood) increased1.3 million tons. Over the same time period gross loads and steam load declined 23% and 58%, respectively.

The RGGI “Investment of RGGI Proceeds Through 2013” (Published April 2015 by RGGI Investment of RGGI Proceeds: Full Report). report states that “Over their lifetime, these RGGI investments are projected to save more than 48.7 million mmBtu of fossil fuels and 11.5 million MWh of electricity, avoiding the release of approximately 10 million short tons of carbon pollution”. In 2013 RGGI CO2 emissions were 89,115,811 tons of CO2 so based on this RGGI report were it not for RGGI there would have been 10 million more tons of CO2 emitted so total emissions would have been 99,115,811 tons so the difference from the baseline is 28,178,600 tons (Table 2 in the white paper). I calculated the percentage difference with and without the program to compare with results from the Murray and Maniloff paper. That calculation estimates that emissions would have only been 11% higher than without the program according to the RGGI estimate of investment impacts.

The lower bound for RGGI program CO2 emissions reductions during this period can also be estimated. It can be argued that the coal and residual oil emissions were lower due solely to the changes in cost differences relative to natural gas and additional regulations and compliance pressure for NOx, Hg, and (in New York) opacity. This assumes that RGGI compliance is incorporated into the bid price and so was not a driver in facility decisions. Making those assumptions then means that the CO2 reductions directly due to RGGI should be the savings of 48.7 million mmBtu of natural gas specifically and the natural gas emission factor for CO2 should be used for CO2 displacement. Table 3 lists this calculated value, 2,848,950 tons. This calculation shows that emissions would have been only 3% higher than without the program.

Recall the quote: “In New York, RGGI has led to a 46 percent reduction in carbon emissions from affected power plants and a 90 percent reduction in coal-fired power generation”. It is difficult to reproduce the reduction estimates but the values are consistent with the white paper estimates of the total reductions. Three different evaluations of the actual impact of RGGI concluded that the emissions would have ranged between 24% and 3% higher than without the program. I should also note that claiming RGGI has anything to do with the coal-fired power generation reductions is a stretch because of the effect of lower natural gas prices and other New York environmental regulations.

Next post: the feasibility of further CO2 reductions in New York.

Author: rogercaiazza

I am a meteorologist (BS and MS degrees), was certified as a consulting meteorologist and have worked in the air quality industry for over 40 years. Originally I worked for consultants doing air quality modeling work for EPA and then went to work with electric utilities where I was responsible for compliance reporting and analyzed the impact and efficacy of air quality regulations. I retired from working for one utility company full-time in 2010 and then worked part-time for most of the New York utility companies as the Director of an environmental trade association until my full retirement at the end of 2016. Environmental staff in any industry have to be pragmatic balancing risks and benefits and I hope my blog (https://pragmaticenvironmentalistofnewyork.blog/) reflects that outlook. Jokingly our job description is to bring the companies we represent to the table so that they are not on the menu. Any of my comments on the web or posts on my blog are my opinion only. In no way do they reflect the position of any of my past employers or any company I was associated with.

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