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Category — Regional Greenhouse Gas Initiative (RGGI)

Regional Greenhouse Gas Initiative (RGGI): A Cap-Tax-Spend Model to NOT Follow

“Bottom line, the program has raised electricity prices, created a slush fund for each of the member states, and has had virtually no impact on emissions or on global climate change.”

Against a backdrop of oil spewing into the Gulf of Mexico, the Obama administration stepped up its campaign to pass national climate change legislation. Senate Majority Leader Harry Reid, D-NV announced last week that he plans to bring a comprehensive energy and climate bill to the Senate floor by the end of the July. The bill, still to be written, is expected to include a cap on carbon emissions produced by the nation’s electricity providers.

But before the U.S. embraces such a program, Congress — and the public — would be wise to examine the early performance of the Regional Greenhouse Gas Initiative (RGGI), the nation’s first mandatory greenhouse gas cap and trade system.

Bottom line, the program has raised electricity prices, created a slush fund for each of the member states, and has had virtually no impact on emissions or on global climate change.

Background

The federal government has been debating national climate legislation since 1992. Over one-hundred heads of state attended the United Nations Conference on Environment and Development, where it was assumed that man-made global warming was a problem and deserved public-policy action.

The Kyoto Conference followed in 1997.  The conference resulted in the proposed Kyoto Protocol, a treaty to reduce greenhouse gas emissions (“GHG”) through either a cap-and-trade or a carbon tax programs in developed nations, and through carbon emission subsidies for underdeveloped nations.

The Protocol established the concepts of Joint Implementation (“JI“) and Clean Development Mechanism (“CDM”) as means to fund GHG reductions in the developing world. With Kyoto, “carbon finance” was born.

Major compromises in Kyoto included setting 1990 as the baseline to get Eastern European buy-in and exempting the underdeveloped world. The 1997 Byrd-Hagel Resolution, which passed the U.S. Senate by 95-0 ensured the U.S. would not sign onto Kyoto. It was the sense of the Senate, as cited in the resolution, that the protocol would “result in serious harm to the economy of the United States.”

RGGI in Action

Ten years later, in 2008, the Regional Greenhouse Gas Initiative (“RGGI”) was launched. [Read more →]

July 19, 2010   8 Comments