How Much Has the Regional Greenhouse Gas Initiative Reduced CO2 Emissions?

The Regional Greenhouse Gas Initiative (RGGI) was supposed to be nearing completion of a 2016 Program Review but the election of Donald Trump and the fate of the national Clean Power Plan has delayed that process. This is the second post in a series of posts that will discuss how RGGI has fared so far and how that could affect the program review. As noted previously, I believe that RGGI allowance prices add to the cost of doing business but because the cost of allowances can be added into the bid price it is a nuisance and not a driver of decisions. I will show how this added cost ultimately affects emissions in this post.

I have been involved in the RGGI program process since its inception. Before retirement from a Non-Regulated Generating company, I was actively analyzing air quality regulations that could affect company operations and was responsible for the emissions data used for compliance. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

RGGI Region CO2 Emission Reductions
For this analysis the RGGI reductions in the first two compliance periods of 2009-2011 and 2012-2014 will be compared to a pre-program baseline of 2006-2008. Note that this is an update to the estimates provided in an earlier post to incorporate RGGI’s latest Investment Summary Report . table-1-rggi-annual-co2-changes lists the changes in CO2 emissions in the RGGI states by fuel type. Note that this analysis uses EPA data and is not completely compatible with the RGGI affected source inventory.

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 the 2012-2104 compliance period there has been a 36 million ton reduction from the 127 million ton baseline or a 28% reduction. Note that coal and residual oil emissions dropped 49 million tons from the baseline of 85 million tons or 57%. Natural gas emissions increased 13 million tons and other solids (mostly wood) increased 0.5 million tons. Over the same time period, gross loads and steam load declined 20% and 55%, respectively.

According to the most recent RGGI Investment Summary Report “The lifetime effects of these RGGI investments are projected to save 76.1 million MMBtu of fossil fuel energy and 20.6 million MWh of electricity, avoiding the release of approximately 15.4 million short tons of carbon pollution.” In the 2012-2014 compliance period RGGI CO2 emissions were 91,421,635 tons of CO2 so based on this RGGI report were it not for RGGI there would have been 15.4 million more tons of CO2 emitted so total emissions would have been 106,821,635 tons. I also calculated the percentage difference with and without the program and that shows emissions would have been 17% higher than without the program.

A paper by Murray and Maniloff (2015) includes an estimate of RGGI program emission reductions. They concluded 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 April 29 2016 RGGI stakeholder presentation described that paper and further suggested that “The other half is due to recession, complementary environmental programs and lowered natural gas prices.” The results in this paper are based on an econometric modelling analysis.

After the publication of the Murray and Maniloff paper I contacted the authors with my reservations about their approach. After an initial response from Dr. Maniloff to my reservations I never received a follow up to my response. One disagreement was whether CO2 is different than all other air pollutants such that this undermines their explanation of how firms react to carbon constraints. I took exception to their characterization “firms facing a future carbon price regime may have reacted by retooling power plants to lower emitting processes in advance of the regulation taking effect”. I noted that there are no end of pipe abatement technologies for CO2, as there are for other pollutants (e.g. SO2 scrubbers) save for CCS which is not economic. Dr Maniloff responded that “this hardly means there are not actions that can be taken in response to the carbon constraints. Plants can improve efficiency (heat rate) at fossil units as they have, and firms can engage in fuel switching/redispatch from coal and oil to gas and renewables, as they have.” I responded that this is fine in theory but in practice, especially in a de-regulated market, the control strategy is to simply run with the allowances that are purchased. Heat rate improvements run the risk of running afoul of New Source Review requirements. If EPA determines that facility upgrades improve performance above their thresholds, then that the facility must upgrade its pollution control equipment to new source standards. Improvement to heat rate would likely throw the facility into NSR immediately and the costs of that equipment cannot be directly recovered in the bid price and those costs would overwhelm any value to RGGI compliance. The cost of carbon has been so low relative to the fuel cost that a switch to natural gas was the driver only based on fuel costs. Affected de-regulated sources do not re-dispatch to the operator’s renewables, they simply run less. Practically speaking for RGGI affected sources CO2 control was different because the only viable option was to run based on allowances purchased.

I think the biggest problem is that econometric models cannot fully account for site specific regulation impacts. No model can account for all the effects of regulations on company decisions to invest in new control equipment unless each facility is explicitly considered. Because of my particular experience in New York I have explicitly considered the factors affecting particular facilities when analyzing the impact of regulations. Consider, for example, the coal-fired RG&E Russel station in Rochester, NY and the NRG Huntley station outside Buffalo, NY. Before RGGI began the owners were faced with decisions for the future.

Before 2009, Russel station needed to invest in pollution control equipment for particulates, Hg and NOx or the facility would not be able to operate and meet emission compliance requirements already on the books. It operated from 2006-2008 (emitting ~ one million tons of CO2) but retired before 2009. I believe the owners decided that they might not be able to recover the costs for all the pollution control equipment over time so they decided to retire the facility. RGGI compliance is only an issue when the unit runs and simply adding the allowance cost to the bid price insures that cost is recovered. Therefore, I conclude that none of the observed reductions from this facility can be ascribed to RGGI.

At the other end of the spectrum for New York coal facilities is Huntley. This facility retired in early 2016 even though its owners made investments in pollution controls to meet the opacity, Hg and NOx limits. Despite those investments the facility closed like many other coal-fired plants because the operating cost of burning coal was not competitive with gas-fired competition. Presumably the erosion of load due to the recession and loss of manufacturing higher load requirements also played a factor. It can be argued that adding the allowance price to their bids meant the unit ran less. In practice I believe that this factor was small. It is only when the added price is enough to change the order of the bids in a step-wise fashion that there is an effect. My understanding is that the allowance price is so small relative to the fuel price differential that it was inconsequential. Given the range of factors affecting these coal units we can assume that New York coal retirements and operating reductions are more likely due to non-RGGI factors than RGGI itself. Ultimately, look at it this way – in the absence of RGGI the facilities would still have retired so any modeling approach that presumes that RGGI influenced the NYS coal retirements is wrong.

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 pollution control decisions. Making those assumptions then means that the CO2 reductions directly due to RGGI should be the savings of 76.1 million mmBtu of generation from natural gas specifically and the natural gas emission factor for CO2 should be used for CO2 displacement. Table 3 lists this calculated value, 4,452,850 tons. This calculation shows that emissions would have been only 5% higher than without the program.

To summarize, there is a range of CO2 emissions with and without RGGI based on assumptions and methodology. The upper bound is an econometric model that estimates that emissions would have been 24 percent higher without the program. RGGI estimates that emissions would have been 17% higher than without a program. If you assume that all the savings in fossil fuel use only displaced natural gas use then emissions would have been only 5% higher.

Has the Regional Greenhouse Gas Initiative Been Successful?

The Regional Greenhouse Gas Initiative (RGGI) was supposed to be nearing completion of a 2016 Program Review[1] but the election of Donald Trump and the fate of the national Clean Power Plan has delayed that process. This is the first post in a series of posts that will discuss how RGGI has fared so far. This particular post will provide background information so that I don’t have to include it every time. The RGGI stakeholder process is dominated by its adherents and now that I am retired I can offer an alternative view of the program. In this post I will offer my thoughts on whether the program has been successful.

RGGI is a cap and auction program in nine states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont – to reduce greenhouse gas emissions[2]. According to the most recent RGGI Investment Summary Report[3]:

Proceeds from the Regional Greenhouse Gas Initiative (RGGI) have powered an investment of $1.37 billion in the energy future of the New England and Mid-Atlantic states. This report reviews the benefits of programs funded through 2014 by RGGI investments, which have reduced harmful carbon dioxide (CO2) pollution while spurring local economic growth and job creation. The lifetime effects of these RGGI investments are projected to save 76.1 million MMBtu of fossil fuel energy and 20.6 million MWh of electricity, avoiding the release of approximately 15.4 million short tons of carbon pollution.

I have been involved in the RGGI program process since its inception. Before retirement from a Non-Regulated Generating company, I was actively analyzing air quality regulations that could affect company operations and was responsible for the emissions data used for compliance. From that background let’s look at the RGGI results quoted above.

The biggest flaw in the adherent’s vision of RGGI success is that RGGI is a driver of affected source decisions. In my opinion based on my experience and discussion with company folks responsible for the economics and operations of affected facilities where I worked and elsewhere, RGGI is simply a tax. Yes it adds to the cost of doing business but because the cost of allowances can be added into the bid price it is a nuisance and not a driver of decisions. I will address how this added cost ultimately affects emissions in a later post.

When RGGI notes that $1.37 billion is being invested in the energy future of the New England and Mid-Atlantic states that number reflects the proceeds from the allowance auctions aka the tax. Because this is a carbon tax there a couple of cautionary tales. The reference notes that the nine participating RGGI states received $1.79 billion in auction proceeds in the period covered by this report. RGGI investments represent $1.37 billion spent to date and another $329.4 million is committed to 2015 and future programs. Note that these numbers do not total up. Despite best intentions by those folks who set up the program $93.1 million has been transferred to state general funds by politicians. In other words any carbon tax should have iron clad specifications on how the money will be used or politicians will get involved and co-opt the stated goal of the tax.

In RGGI the stated goal was to invest the RGGI proceeds in programs that would ultimately reduce carbon emissions and protect the rate-payers. The Investment Summary Report notes the fraction of funding that reduce carbon emissions (overall 80%) for energy efficiency (57%), clean & renewable energy (15%), and GHG abatement (8%) programs. Direct bill assistance (15%) is a more difficult sell as a carbon abatement program but because increased costs to the consumer disproportionately affect those least able to afford those increases I personally can live with those programs. However, 4% of the funds went to “administration” and another 1% to the RGGI organization itself. Clearly when big bucks are involved politicians are not the only ones attracted to the trough. The concept of a carbon tax that offsets that cost and returns all proceeds to offset other taxes is attractive. Based on RGGI, however, be careful what you wish for.

To their credit RGGI analyses have always been careful to not over-sell the actual emission reductions due to RGGI itself. When the Program Review notes that the lifetime effects of these RGGI investments are projected to save 76.1 million MMBtu of fossil fuel energy and 20.6 million MWh of electricity they are basing those numbers on the displacement of energy and emissions due to their energy efficiency, clean and renewable energy and GHG abatement programs. As noted earlier these numbers will be addressed in a later post.

Finally let’s consider the ultimate goal of the program – GHG reductions. The Program Review Summary claims their investments have avoided the release of approximately 15.4 million short tons of carbon pollution. However, note that they spent $1.37 billion to achieve those reductions so the cost per ton is $88.67. Given that the EPA social cost of carbon is $36 per ton these reductions are not cost effective by that measure.

However one thing is missing in all of the analyses and reports to date. The ultimate purpose of the program is to lower global warming but nothing has ever been published quantifying what these reductions will do in that regard. A back of the envelope calculation shows why. A recently published paper[4] estimates that the Federal Clean Power Plan will reduce global temperature rise by 0.013 degrees Centigrade. The Clean Power Plan is supposed to reduce CO2 emissions by 870 million tons. The carbon reductions attributable to RGGI are 15.4 million tons and simply pro-rating the published projection of global temperature rise with the RGGI emissions yields 0.00023 degrees Centigrade. In my opinion because we cannot possibly measure that small a change in temperature the global warming benefit of this program is nil.

I will give RGGI credit for developing the infrastructure to conduct a cap and auction program. They have an auction system that has conducted numerous sales without a hitch, there is a CO2 tracking program and the compliance methodology works. In addition the investments in energy efficiency and direct bill assistance are social benefits with no regrets.  As a result I believe that RGGI is only a qualified limited success and no where near as successful as it its adherents claim.

[1] https://www.rggi.org/design/2016-program-review

[2] https://www.rggi.org/rggi

[3] https://www.rggi.org/rggi_benefits

[4] Bjorn Lombory, 2015: Impact of Current Climate Proposals, Global Policy, Article first published online: 9 NOV 2015, DOI: 10.1111/1758-5899.12295, http://onlinelibrary.wiley.com/doi/10.1111/1758-5899.12295/full

Scott Pruitt Nomination and EPA Approach to Interstate Transport Ozone Attainment

At this time there is quite a bit of noise about potential problems if Scott Pruitt is confirmed to head EPA because he would “hamstring EPA’s authority to set nationwide environmental standards”. As I understand it he is proposing to cooperate more with the states. This post describes a particular example where states proposed an alternative approach but in a recent action EPA continues to ignore the alternative proposed. I hope to show why I think that is a mistake. If Pruitt can get EPA to respond to this type of state action I support his nomination.

In my opinion one of the bigger air quality issues is ozone attainment, particularly as it relates to interstate transport. EPA explains that “air transport refers to pollution from upwind emission sources that impact air quality in a given location downwind”.  Emissions of nitrogen oxides (NOX) and Volatile Organic Compounds (VOC) can each undergo chemical reactions in the atmosphere to create ground-level ozone (smog) pollution.

The EPA website for interstate air pollution explains the “Good Neighbor” provision that requires EPA and states to address interstate transport of air pollution that affects downwind states’ ability to attain and maintain ambient standards. One of the reasons that the ozone limit has proved to be particularly difficult to attain is that the standard was recently tightened. In this example, I want to address the recent EPA Notice of Data Availability for the preliminary interstate ozone modeling data for this new limit.

EPA notes that they have completed preliminary interstate ozone transport modeling relevant for the 2015 ozone national ambient air quality standard. We are currently in the public comment period where the Agency is providing an opportunity for public review of this modeling data, including projected ozone concentrations and contributions for 2023, as well as projected emissions, including emissions from the power sector, that were used for this modeling.

In EPA’s approach the modeling projects ozone concentrations in 2023 at individual monitoring locations to determine the state-by-state contribution. EPA used a 2011-based air quality modeling platform which includes emissions, meteorology and other inputs for 2011 as the base year for the modeling and then projected the 2011 base year emissions to the 2023 base case scenario. The modeling domain covers the entire United States with a grid resolution of 12 km. I refer you to the technical support document for details of this modeling analysis.

I think that there are two glaring problems with EPA’s approach: one related to the emissions and one related to the air quality modeling. Both are related to the fact that the current ozone problem is episodic. Peak ozone concentrations only occur during several-day summertime hot and humid periods which also are periods of peak electrical demand.

EPA’s emissions approach goes to great lengths to project future year emissions at the expense of actual observed emissions. EPA uses the Integrated Planning Model, a massive proprietary planning model to project the emissions in future years. Because emissions are dependent upon fuel prices, technology, regulations, and energy use trying to estimate future emissions is a very complex undertaking and can only provide annual or seasonal average estimates. However, the primary concern are the peak periods and this model does not project these extreme periods well.

In order to address that problem the Eastern Regional Technical Advisory Committee was formed to prepare an alternative to the EPA emissions modeling approach. Basically the states and industry collaborated to develop an alternative based on adjustments to observed emission and operating rates. The result was Eastern Regional Technical Advisory Committee Electricity Generating Unit Emission Projection Tool. Importantly, this approach more accurately represents the actual and future emissions during ozone episodes than the EPA approach.  Unfortunately, this alternative approach was not used by EPA for this modeling.

Although EPA’s air quality modeling analysis is an impressive effort it also falls short of what I think is needed. As noted previously, EPA’s ozone projection methodology covers the entire United States on a 12 km by 12 km grid. My primary interest is New York State and the largest interstate impact of New York sources to ozone monitoring stations is downwind of New York City in Connecticut. I am convinced that the complex meteorological conditions during ozone episodes in this situation (land and sea breezes, elevated terrain concerns, and the nocturnal boundary layer structure along the coast) cannot be represented well enough to be accurate using such a coarse grid. Moreover, using that grid means that the many of the emissions are incorporated into the modeling at the same coarse grid resolution and there are indications that leads to further inaccuracies.

There is another problem with EPA’s modeling. They used a base year of 2011. As part of comments I developed to address the previous round of EPA interstate modeling, I compared daily New York electric generating unit emissions and observed ozone levels on an annual basis by running a regression to determine if there was a relationship. Not surprisingly there always was a statistically significant relationship. However what was interesting is that that strength of the relationship has changed recently. Prior to 2014 the regression analysis always indicated that there was a relatively strong relationship but in the last three years the relationship has deteriorated substantially. In order to accurately determine what is causing high ozone today a base year in the last three years is needed when this different regime of the relationship occurred.

I believe that in order to solve the interstate ozone transport problem it is first necessary to understand what is going on. EPA’s preliminary modeling described in their December 2016 Notice of Data Availability will not provide the necessary level of detail to describe the current situation. The Eastern Regional Technical Advisory Committee emissions modeling approach addresses one aspect that needs to be corrected. If Scott Pruitt’s approach to administering EPA would facilitate EPA using this alternative and modeling this problem differently then I believe his nomination should be supported.

Pragmatic Environmentalist of New York Principle 4: We can do almost anything we want, but we can’t do everything.

This is a background post for my perception of pragmatic environmentalists per the principles listed in the about section of this blog.

Environmental initiatives often are presented simply as things we can do. Over at Climate Etc. the Planning Engineer coined this statement when he said that when his children asked “Can we do this?” he used to annoy his children with the answer “We can do almost anything we want, but we can’t do everything.” They came to learn that response meant that something “unthinkable” would likely have to be given up to indulge the extravagance.

This is a fundamental aspect of pragmatic environmentalism. While it is fine and appropriate to propose actions to reduce environmental risks that are technologically feasible, in the real world the costs to implement those policies carry costs that have to be considered. Moreover there could be unintended consequences.

As the Planning Engineer explains in his blog post: “There is no bargain to be found by pushing jointly for both more microgrids and the greater integration of “clean” resources. Having both will require huge sacrifices. If society’s utmost desire is a “clean”, highly reliable grid, resilient, secure grid – we likely can build that at some enormous cost. However, if cost is a factor impacting electric supply then tradeoffs will have to be made from among competing goals and technologies.”

Pragmatic Environmentalist of New York Principle 3: Baloney Asymmetry Principle

This is a background post for my perception of pragmatic environmentalists per the principles listed in the about section of this blog.

I updated this on May 8, 2017 to add references for the lake effect snowstorm example and lake temperature data.

Alberto Brandolini: “The amount of energy necessary to refute BS is an order of magnitude bigger than to produce it.”

Brandolini’s link is to a presentation on the problem and includes recommendations for dealing with it in the context of the managerial leadership. However it is directly relevant to environmental issues as well.

Consider this example of global warming causing severe weather. In November 2014 there was a massive lake-effect snow storm in Western New York. New York’s Attorney General said the snowstorm was evidence of needed action on climate change. Slate followed the event with an article “proving” the claim.

In order to repudiate the global warming trigger claim the lake effect mechanism has to be explained and the relevant data from the event compiled. The Slate article explained that lake effect snow is caused by a temperature difference between a body of water and the air over the lake. The BS claim is that because the water is warmer then the storm was worse. However the alignment of the wind with the lake, the depth of the cold air layer, and the change of wind direction with height all contribute to the severity of a lake effect snowstorm.

To repudiate the BS claim these other factors have to be explained and the necessary data to show how they affected the storm compiled and presented. It turns out that the primary factor causing the extraordinary snow amounts with this particular storm was that the wind direction stayed constant for much longer than normal. That being the case how did global warming contribute to constant winds? Moreover, when I checked the actual lake temperature with the average lake temperature it was more or less the same as the average. The Slate article relied on average temperature data but not the data from the event.   If global warming were the cause then why wasn’t the lake warmer than average during the event?

Update May 8, 2017: References for the lake effect snowstorm example and lake temperature

Lake Effect Snowstorm November 17 – 19, 2014

Average Lake Erie Temperature Period of Record 1992 – 2016

  • November 19: 9.7 deg. C
  • November 20: 9.5 deg. C
  • November 21: 9.4 deg. C

Actual Lake Erie Temperature during the event – All three days were colder than average!

  • November 19, 2014: 8.9 deg. C
  • November 20, 2014: 8.2 deg. C
  • November 21, 2014: 7.5 deg. C

 

Pragmatic Environmentalist of New York Principle 2: Sound Bite Environmental Issue Descriptions

This is a background post for my perception of pragmatic environmentalists per the principles listed in the about section of this blog.

Sound bite descriptions necessarily only tell one side of the story because they have to fit space available. As a result they frequently are mis-leading, not nuanced, or flat out wrong.

Sound bites are brief recorded statements (as by a public figure) broadcast especially on a television news program or a brief catchy comment or saying. In this principle, I would expand the definition to include the core information that “everyone knows” about a particular topic. In today’s society they unfortunately represent an inordinate share of the public’s knowledge of an environmental issue.

In my, admittedly limited, experience trying to describe a technical issue or project to the press or a public relations person the interview often led to innocent mis-characterizations. If the audience does not have relevant background and you are not experienced talking to that kind of audience to include appropriate background information, the resulting sound bite can be mis-leading.

Because there are space and time constraints there is no room for the background caveats to explain the nuances of the issue. This limitation also can be primarily innocent.

However, there can be more sinister implications to the sound bite when the story is politically motivated or fits the agenda of an organization. In these cases noble cause corruption can lead the author of the sound bite to deliberately characterize the issue incorrectly by selectively choosing the information included and not including key caveats.

Whatever the cause, the problem for pragmatic environmentalists is that correcting the record won’t be a sound bite so the audience that only has the patience to hear the sound bite may ignore the correction or lose interest in the complete story. Moreover space or time may not even be available to provide the clarifying information.

Pragmatic Environmentalist of New York Principle 1: Environmental Issues are Binary

This is a background post for my perception of pragmatic environmentalists per the principles listed in the about section of this blog.

In almost all environmental issues there are two legitimate sides. Pragmatic environmentalism is all about balancing the risks and benefits of both sides of the issue. In order to do that you have to show your work.

While this might seem patently obvious presented in this fashion consider how often the public discourse on an environmental issue is just a long list of environmental impacts that “everyone knows” and suggestions that those impacts will be catastrophic.

Consider this example: “For decades, power plants in our communities here in Western Queens have strongly contributed to increased asthma rates and increases in hospitalizations and ER visits that exceed the average in Queens,” said Councilman Costa Constantinides.

It is generally accepted that asthma rates have been increasing but the problem is that over the same period where they are increasing ambient pollution levels have been going down. Consider the EPA Air Quality Trends at New York City information that shows that from 2000 to 2015 ozone is down 16.7%, inhalable particulate matter is down 31.7% and sulfur dioxide is down 85.1%. These data suggest that increasing asthma rates are not the result of increasing pollution rates contradicting the environmental impact that “everyone knows” causes increasing asthma rates. For a comprehensive evaluation of the EPA science related to particulate matter health impacts I recommend “Scare Pollution: Why and How to Fix the EPA”.

Pragmatic environmentalists recognize that air pollution causes health impacts. However the risk that additional societal investments for increased pollution control could not provide the intended benefits has to be considered. In particular, if society spends money to reduce power plant emissions below the rates that have contributed to the lower observed pollution levels it may not improve asthma rates and worse may divert money that more appropriately should be invested into research determining why asthma rates are increasing so that the actual causes can be addressed.