Malloy noncommittal on resetting RGGI

The pressure is ticking up on Gov. Dannel P. Malloy and nine other Northeast and Mid-Atlantic governors participating in the Regional Greenhouse Gas Initiative — the nation’s first carbon dioxide trading and reduction program.

Letters went out Thursday to all 10 RGGI (pronounced reggie) state governors asking them to support adjusting the program to make it more powerful in reducing emissions and to generate more income for each of the states.

An email statement from a Malloy spokesperson asserted, as the governor himself has in the past, that Malloy is “a strong proponent of RGGI.” But the statement stopped short of advocating program adjustments and even seemed to leave the governor an out should he choose to leave the program: “He is awaiting the completion of a review and analysis of the RGGI caps, and will adopt the appropriate approach to reducing carbon emissions at that time,” the statement said.

The advocacy group Environment Northeast spearheaded the letter campaign, but more than 300 groups in total signed the letters; more than 20 signed the one to Malloy.

RGGI completed its first three years at the end of 2011. Under the program rules, a review is required and has been under way. Adjustments also can be made to how the program runs. The problem is this: increased use of natural gas has meant the more than 200 power plants in the region, 14 in Connecticut, are using more of it than ever, so they’re polluting less. In fact, they’re polluting so little that they’re not even hitting the carbon dioxide cap set by RGGI — 165 million tons per year.

RGGI essentially allows plants to pay for the right to pollute – they buy allowances through quarterly auctions for every ton of carbon dioxide they emit. The cap set back in 2008 was based on the predicted 2009 pollution levels. But because of the increased natural gas use, the prediction turned out to be way off.

That in turn has meant the auction prices are at rock bottom and some allowances are going unsold, so the money raised through auctions has been lower than it might have been.

Make no mistake, however, the auctions have resulted in a windfall for each state. Through June of this year, RGGI has generated more than $1 billion including about $60 million for Connecticut. Under the RGGI rules, at least 25 percent of that profit is supposed to be reinvested in clean energy programs, though states are free to determine allocation formulas, and some have raided the funds to plug budget gaps.

Connecticut has put all but a small amount of its profits into energy programs (the rest is for administration): 69.5 percent goes to energy efficiency programs administered by the utilities and the municipal electric cooperative, 23 percent to renewable energy and 4.5 percent to other greenhouse gas reduction projects.

ENE has calculated that those funds act as multipliers by creating energy efficiencies that further reduce electricity use and create jobs. ENE’s calculations show that the RGGI funds have created $219 million in direct and indirect economic value in Connecticut alone as well as created 1,514 job years of employment.

Peter Shattuck, ENE’s director of market initiatives, said his group supports resetting the caps based on what actually turned out to be the 2009 levels — 106 million tons. And if that happens, he has calculated that through 2020 it could generate an additional $324 million for the state, adding $1.2 billion in net economic value and another 8,200 job years of employment.

But Shattuck points out getting all the governors on board could be problematic. Some see RGGI as pointless because natural gas has already had RGGI’s intended effect. And then there’s the matter of Gov. Chris Christie of New Jersey, who famously pulled his state out of RGGI — except not really. Pending lawsuits could determine New Jersey’s status.

“The Malloy administration has certainly been committed to this,” Shattuck said. “But it’s synchronized swimming. There are 10 states that need to agree on path forward. We want to embolden states like Connecticut to move ahead. We want them to see RGGI as the important program we think it is.”