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Regional Climate Pact Faces Pressure to Curb Inequity, Emissions

Sept. 8, 2021, 10:01 AM

An 11-state cap-and-trade program is under growing pressure to slash even more carbon emissions to ensure communities bearing the brunt of pollution and climate impacts benefit from cleaner air as well as the billions of dollars that the program raises.

The push comes as the Regional Greenhouse Gas Initiative, known as RGGI, prepares to launch a full-fledged review of its operations this fall. The review, performed every few years, will guide states as they weigh whether to tighten the overall emissions cap, expand the program, or make other changes.

Environmental justice advocates say one move RGGI should make is to ensure communities have more say in distributing funds raised by its carbon auctions, which have totaled more than $4 billion over the last 12 years or so.

RGGI money currently pays for projects that directly benefit low-income households, including weatherization. But the money should be specifically targeted to train and employ local residents so communities also get an economic benefit, said Annel Hernandez, associate director of the New York City Environmental Justice Alliance.

“We don’t want to see people from out of state coming in doing this work and then leaving—we want to make sure that these investments and this transition is spurring new renewable energy economy in New York and in New York City,” she said.

RGGI will consider a broad array of environmental justice concerns during its review, which will include a detailed economic analysis of state electricity sectors, said its chairman, Martin Suuberg. It also will host several online public meetings and accept written comments, he said, a process that could extend into 2022.

Advocates want to expand the regional pact to cover fossil fuel powered “peaker” plants, which utilities turn on to meet high demand, and cover waste-to-energy plants, all while eliminating an exemption for small generators producing less than 25 megawatts of power.

But RGGI can’t impose top-down requirements on its own, said Suuberg, who is also commissioner of the Massachusetts Department of Environmental Protection. Each state must agree to program changes and get either legislative approval or regulatory approval from governors.

Going Beyond

Originally touted as the nation’s first cap-and-trade program, RGGI calls itself a “cap-and-invest” initiative, as it sets a gradually declining cap and requires power plants to acquire allowances through an auction for each ton of carbon dioxide emitted.

States use quarterly auction revenue to shield low-income ratepayers from higher utility costs and to pay for energy efficiency and clean energy projects, which in turn help further reduce emissions.

Many environmental justice advocates say cap-and-trade programs tend to be more about easing industry burdens than making dramatic emissions cuts or helping vulnerable communities. But many also acknowledge that RGGI funds generally have done a lot of good.

The program has halved power sector emissions from 2005 levels for its members, which include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia. About 28% of New York’s RGGI revenue in 2019, for example, went to energy efficiency efforts, Hernandez said.

Several states have gone beyond RGGI reductions. They’ve passed climate laws or adopted goals imposing much deeper emissions cuts affecting a broad array of sectors and in some cases directed significant climate funding to vulnerable communities.

New York’s Climate Leadership and Community Protection Act, for example, calls for cutting overall emissions 85% 2050 from 1990 levels and 70% renewable energy by 2030—and gives environmental justice communities more of a voice in where funding goes.

Environmental justice advocates want RGGI to follow New York’s example.

Hernandez said the New York State Energy Research and Development Authority has assured advocates that the law’s equity mandate—requiring 35% to 40% of climate investments goes to disadvantaged communities—will apply to state RGGI revenue.

New York has received a total of $1.4 billion from its share of RGGI going back to 2008, with proceeds funding everything from energy efficiency to clean energy projects. But the state, like several in the pact, has used some portion of RGGI money—roughly 20%—to shore up its general fund, said Connor Bambrick, climate policy director for Environmental Advocates New York.

Pennsylvania Poised

As RGGI undergoes a tuneup, two more states soon could join the collective.

North Carolina took its first regulatory steps to join in July. Pennsylvania is further along—its attorney general is now reviewing a regulatory review board’s recent vote to join that could place the state into RGGI as soon as early 2022.

Industry experts warn Pennsylvania’s move could prove politically shaky if bumps occur, such as unexpected increases in ratepayers’ utility bills. Industry officials and many Republican lawmakers oppose joining through an appointed environmental board, saying it sidesteps the state legislature.

Advocates are confident the state will remain on track and have been assured that significant portions of the state’s RGGI receipts will go to disadvantaged communities.

Ethan Story, an attorney and community advocate for the Center for Coalfield Justice, said his group wants assurances of proper oversight on how dollars are allocated and spent in vulnerable communities, and that funds help coal communities in their transition away from coal-dependent jobs.

Constraints on Spending

If Pennsylvania does join RGGI, there will be constraints on how it can spend its share of RGGI revenue, barring changes.

Absent new legislation, the revenue would go into the state’s Clean Air Fund, which doesn’t clearly specify what funding goes to address environmental equity, said Vince Brisini, a former Pennsylvania environmental official who tracks the RGGI program as director of environmental affairs for Olympus Power.

That could pose hurdles for Pennsylvania environmental justice advocates, who outlined their concerns in an Aug. 20 letter to the state’s regulatory review board.

“It is an undeniable reality that low income communities and communities of color are disproportionately impacted by environmental pollutants” and lack resources to cope with “increasingly intense” heat waves, flooding, and other climate impacts, the Pennsylvania Utility Law Project, POWER Interfaith, Center for Coalfield Justice, and the Black Church Center for Justice and Equality, wrote in their letter.

The coalition won the addition of environmental equity priniciples to rules underpinning the state’s move to join RGGI, including more outreach to disadvantaged communities.

To contact the reporter on this story: Dean Scott in Washington at dscott@bloombergindustry.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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