Of caps and emissions and a program named Reggie

The Regional Greenhouse Gas Initiative — the first-and-only-in-the-nation carbon dioxide trading and reduction program — has reached its first three-year compliance and evaluation cycle with mixed results.

Total emissions from more than 200 plants in the 10 participating Northeast and Mid-Atlantic states were 34 percent below the cap at the end of 2011, according to preliminary calculations by the advocacy group Environment Northeast. Fourteen of those 200 plants are in Connecticut.

Good news for the air and our lungs. But, while not exactly bad news, it’s not really how this process was supposed to work.

RGGI, pronounced Reggie, was designed to lower emissions by 10 percent over 10 years beginning in 2009, by selling allowances to plants for the right to pollute. For every ton of carbon dioxide they emit, power plants must buy one allowance from the states through quarterly auctions.

But because emissions are low, those allowances are not in demand, and they are selling for the lowest allowable price — $1.89. That’s if they’re selling at all. While 63 percent of the allowances available sold in the December auction — the final one of the three-year cycle — only 17 percent sold in the September auction and 30 percent sold in the June auction.

Peter Shattuck, ENE’s carbon markets policy analyst, said the December surge was likely plant owners being on the safe side to avoid fines.

Auction proceeds go to the states, and RGGI requires that at least 25 percent of them go toward “consumer benefit or strategic energy purpose.” In Connecticut, as with most states, nearly all of the funds are going to that — mainly for energy efficiency.

In Connecticut through 2011, 33.3 million allowances have been auctioned, 22.7 million of which were sold, totaling nearly $54 million. More than $37 million of that, or 69.5 percent, went to energy efficiency, distributed proportionally among Connecticut Light & Power, United Illuminating and the Connecticut Municipal Electric Energy Cooperative.

Twenty-three percent, or just over $12 million, went to the Clean Energy Finance and Investment Authority(previously the Clean Energy Fund). And the remainder, 7.5 percent, or about $4 million, went for other energy programs and administration.

But the other piece of the not-quite-wonderful news is that the lower the emissions, the fewer allowances that will sell, the lower the price and the less money for the states.

What’s more, it’s generally agreed that the biggest reason for the low emissions has little to do with RGGI itself. It’s the result of power plants switching to less polluting natural gas mainly because of low natural gas and high oil prices over the past several years, as well as use of more renewable energy and energy efficiency measures.

Bottom line: “It highlights the need to update the cap,” Shattuck said. “We think it’s clear. We have almost three full years of data, and emissions remain even well below the reductions required over the 10 years.”

In the next couple of months, it’s widely anticipated RGGI will lower the cap. And then? Well, stay tuned. With rumblings in the last year of states looking to pull out of RGGI — notably New Jersey, which said it was pulling out at the end of 2011, but hasn’t — who knows what could happen?