Vermont reaps rewards from carbonreduction program
Vermont is getting a great deal from a regional carbon-reduction program that gives the state more than $2 million a year for energy-efficiency initiatives for households and businesses.
The money is being made available through the Regional Greenhouse Gas Initiative, which initiates refer to as Reggie. This 10-state partnership represents the nation’s first mandatory cap-and-trade approach to reducing power-plant emissions that are contributing significantly to climate change. Because it is so far functioning as effectively as its architects had hoped, Reggie is seen as a model for a national cap-and-trade system that environmentalists are urging Congress to create.
Under Reggie, all six New England states plus Delaware, Maryland, New Jersey and New York have agreed to set limits on the greenhouse gases released from their regulated electric-generation facilities. Vermont shares in the proceeds from quarterly auctions of Reggie permits, each of which allows a plant to release one ton of carbon dioxide. The state received $685,000 from the latest auction, which took place in June, even though its electric generating plants emit virtually no CO2 for the purposes of Reggie.
“We negotiated really well,” explains Dick Valentinetti, head of the air-quality program in the Agency of Natural Resources. He was among the officials who represented Vermont in discussions in 2002 that led to the launch of Reggie five years later.
Vermont Yankee, the largest in-state electric power facility, does not emit greenhouse gases, while the McNeil wood-chip plant in Burlington, which does emit some, is covered by a Reggie exemption for facilities that rely on biomass for more than 50 percent of the power they generate. The only generators in Vermont covered by Reggie are a pair of small and seldom used gas turbines, one in Montpelier Junction owned by Green Mountain Power and the other belonging to the Burlington Electric Department and situated on the city’s waterfront alongside the defunct Moran Plant.
Reggie’s June auction raised a total of $104 million that the 10 states must invest in renewable-energy projects or in efforts to conserve power. About 33 million carbon-emission permits were auctioned online by a nonprofit corporation that operates under Reggie’s auspices. The nearly 31 permits for the current year brought a price of $3.25 each, which was 8 percent lower than the $3.51 fetched at the March auction. More than 2 million permits for an emission-control period beginning in 2012 sold for $2.06 each, down by one-third from the price for the futures in the March auction.
Valentinetti suggests that uncertainty stemming from Congress’ work on a national cap-and-trade system “definitely dampened” the Reggie futures market. The climate bill approved by the House of Representatives in June contains a provision that would pre-empt Reggie starting in 2012. It remains to be seen how the Senate will act on this legislation, and so the futures market for Reggie permits is behaving warily.
If prices for emission allowances up until 2012 hold steady, Vermont’s share of auction proceeds will amount to about $2.3 million per year. That windfall would appear to confirm Gov. James Douglas’ claim last year that Reggie “will have tangible benefits for Vermont,” even though the state already maintains what the governor described as “the most climate-friendly energy portfolio in the United States.”
All of Vermont’s proceeds from Reggie for the current year are being funneled to the Public Service Department for home weatherization projects. The Reggie money is enabling scores of additional Vermont households to get energy-saving advice as well as home modifications that will reduce power consumption.
Beginning next year, Reggie proceeds will be split between the Public Service Department and Efficiency Vermont, a nonprofit organization that contracts with the Public Service Board to provide energy-saving technical services and financial incentives to homes and businesses in the state. Action by the Vermont Legislature will allow Efficiency Vermont to use its portion of the Reggie funds to help households that are not currently eligible for the state’s weatherization program, says Efficiency Vermont director Blair Hamilton. Under existing standards, a 4-person household in Chittenden County must earn less than $45,060 a year to qualify for state weatherization assistance.
Efficiency Vermont also plans to expand its assistance to Vermont businesses, Hamilton says. In addition to buying permits, power plants in participating Reggie states can use offset allowances to meet carbon emission goals. Offsets can be achieved in a variety of ways, including reductions in methane output from landfills and dairy farm manure management, cuts in sulfur hexafluoride emissions from electric power stations and sequestration of carbon through tree planting.
