Fifteen years ago, a bipartisan group of governors from the Northeast joined with the electric utility industry to figure out a smart, cost-effective way to reduce carbon emissions from power plants. The result was the Regional Greenhouse Gas Initiative, which has contributed to a reduction in carbon emissions of 45% across the participating states. Despite claims by RGGI opponents during the program’s design that it would lead to spikes in cost for consumers, the real-world results have been the polar opposite, with households reaping substantial savings. RGGI is that rare policy that has exceeded expectations.
RGGI works by setting a limit on total emissions from the electricity sector then using market-based forces to achieve those reductions in an economically efficient way. The cap declines over time, meaning emissions — and local air pollution — continue to drop. Researchers at the Columbia University School of Public Health have found that RGGI led directly to hundreds of avoided cases of juvenile asthma and pre-term births because of these air-quality improvements. Permits sold to power plant operators create a stream of revenue that is used to further reduce emissions and provide benefits to consumers.
You may have never heard of RGGI, but you have no doubt heard of programs like Mass Save, which is administered by National Grid and other utilities and has provided more than $500 million in rebates and incentives to residents, businesses and local governments to make their homes and buildings more efficient while creating jobs and boosting economic growth.
Now the Northeast states are working to replicate the benefits of RGGI in the transportation sector, which is now the largest source of pollution in the region. The bipartisan agreement, called the Transportation and Climate Initiative Program, has already been signed onto by Republican Gov. Charlie Baker of Massachusetts, Democratic Govs. Gina Raimondo of Rhode Island — now U.S. commerce secretary — and Ned Lamont of Connecticut and Mayor Muriel Bowser of Washington, D.C.
TCI works in much the same way as RGGI. It requires petroleum importers in participating states to pay a fee based on the level of emissions their fuels create. Just as RGGI uses those fees to provide Mass Save rebates and incentives for LED lights, heating and cooling equipment and home weatherization, TCI proceeds will be used to fund clean transportation options, including modernizing transit, building more electric vehicle charging stations and providing rebates and incentives to people and businesses that purchas electric vehicles. Taken together, these investments mean new jobs, a cleaner and more efficient transportation system and economic growth for our region.
Like RGGI, TCI has significant benefits for public health. A study by the Harvard T.H. Chan School of Public Health found that a robust implementation of TCI would result annually in the avoidance of as many as 1,360 deaths, 320 cases of childhood asthma and tens of thousands of childhood asthma exacerbations. The public health impacts of our inefficient transportation status quo are most pronounced in communities of color, which have historically borne the brunt of transportation pollution. The proceeds TCI would raise would provide an opportunity to reverse these historical trends and advance equitable outcomes in communities that have been underserved by transportation infrastructure or disproportionately impacted by tailpipe emissions. The equity provisions in the TCI framework provide a promising start — implementation must ensure that the economic and environmental benefits of TCI in these communities are real and sustained.
When RGGI was first being implemented, owners of dirty power plants — which would have to pay more for pollution — and their allies predicted that it would cause electricity prices to increase dramatically. One opponent, a state representative in New Hampshire, predicted that RGGI would “double an individual’s electricity bill.” Another opponent, representing a group in New Jersey, said RGGI would “cause electricity rates to skyrocket." These opponents were dead wrong. Since 2008, electricity prices in RGGI states have decreased by 5.7%, while prices in states not participating in RGGI have increased by 8.6%. Rather than burdening electricity consumers with higher electricity rates, RGGI has helped reduce them while resulting in $4.3 billion in new economic growth for the region.
Consumers have saved money not just because the price of a kilowatt of electricity has come down, but also because they are buying fewer kilowatts thanks to more efficient homes, office spaces and manufacturing facilities made possible by Mass Save. A decade after RGGI was implemented, it hums along quietly and anonymously behind the scenes, providing profound benefits to consumers, the environment and the economy — and acting as both a proof of concept and a road map for TCI.
RGGI has helped make Massachusetts one of the most energy-efficient states in the country while advancing economic growth and opportunity. There is no reason our transportation system can’t be just as efficient, and TCI will help us get there.
Marcy Reed is National Grid’s Massachusetts president and executive vice president of energy policy and social impact. Chris Dempsey is director of the advocacy group Transportation for Massachusetts.