Public News Service-WV

August 18, 2010

Cap & Trade Not Raising Electricity Prices In The Northeast

CHARLESTON, W. Va. - While climate legislation is stalled in the U.S. Senate, a cap-and-trade system is up and running in much of the Northeast. It's called the Regional Greenhouse Gas Initiative (RGGI), "Reggie" for short. Ten states from Maryland to Maine put a cap on how much carbon can be generated by electric utilities, with a market on carbon emissions among those utilities.

Peter Shattuck is a carbon markets policy analyst for Environment Northeast. He says RGGI has already begun to cut emissions and raise millions for developing cleaner forms of energy, without increasing power prices for consumers.

"It's showing that cap-and-trade can work, that the sky does not fall down. Electricity prices have actually come down since the start of the program — which is not exclusively due to RGGI, but is encouraging."

According to Andrew Light, senior fellow at the Center for American Progress, a national cap-and-trade system will be needed to meet the country's commitment to reducing emissions to 17 percent below 2005 levels by 2020. However, he believes individual states' plans and regional agreements, such as RGGI, can go a long way toward meeting that goal.

"Collectively, together, those will amount to a reduction of about seven percent below 2005 levels by 2020. And so, that's going to be absolutely necessary for the United States to demonstrate any progress internationally."

Light also thinks a federal system is better because it would make the policy more uniform and predictable. He says the success of RGGI could be duplicated in similar systems being worked out in Western and Midwestern states — or on an even larger scale.

"Really, we might even see a national program that's actually modeled after RGGI coming forward, given that it's probably going to be the first viable American system that we'll see actually in action."

The U.S. House passed a climate bill with a national cap-and-trade plan more than a year ago. Opponents have said it would be costly to implement, and bad for business and consumers. Shattuck says RGGI shows those fears are exaggerated.

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