Regional Initiative Delivers Energy Efficiency, Bill Savings and Jobs
Investments from the Regional Greenhouse Gas Initiative (RGGI) led to more than $1.6 billion in economic value added to the economies of 10 east-coast states. The findings come from an Analysis Group report, "The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States," released Nov. 15, 2011.
RGGI Addresses Power Plant Emissions
The study examined economic impacts from implementation of RGGI, the nation’s first market-based program to address carbon dioxide (CO2) emissions from electric power plants. During the Initiative’s first three years, 10 Northeastern and Mid-Atlantic states raised $912 million from auctioning CO2 emissions allowances. Nearly half of this revenue was invested in energy efficiency programs, with the balance dedicated to bill assistance for low-income households; education, outreach and job training; renewable energy; greenhouse gas programs; and state general funding.
Although CO2 allowance purchases by electric generators impose a small initial increase (by a fraction of a percent) in electricity prices, RGGI-funded energy efficiency investments yield larger savings through reduced energy consumption. These add up to $1.1 billion net savings on electric bills and $174 million savings of natural gas and fuel oil on a net present value basis.
The study calculates that reduced fossil fuel demand keeps more than $765 million in the ten states’ economies. Employment impacts from RGGI are net positive for all 10 states, amounting to 16,000 “job-years” gained regionally, a modest but welcome result during a year in which the civilian labor force in those states dropped by over 73,000. These net positives take into account an estimated $1.6 billion decrease in power-sector revenues from reduced electricity consumption.
Program, Consumer Activity Improve State Economies
The economic benefits of RGGI-funded energy efficiency investments come from two effects. The first is from program activities, such as energy auditors performing benchmarking, workers installing insulation and upgraded windows, and purchases of more efficient replacement appliances. The second occurs as consumers spend and invest money saved from their energy bills.
Among the report’s findings are that RGGI is providing positive economic impacts while achieving emissions objectives and that the design of emissions markets greatly affects the level and distribution of public benefits. Further, it observes that states have used allowance revenues to support diverse programs in accordance with state priorities and objectives but how those proceeds are used affect their economic impacts.
The report did not assess environmental costs or benefits of RGGI.
More on the RGGI Report
Visit the Analysis Group website for more about this report, including links to the full report and its appendix. Report co-author, Susan Tierney, Managing Principal of the Analysis Group, serves on the Alliance to Save Energy’s Board of Directors.
