A cap-and-trade program for carbon dioxide generated $1.3 billion in benefits for nine U.S. states, a finding that may win converts elsewhere in the country.
Funding from the Regional Greenhouse Gas Initiative also created more than 14,000 new jobs in the Northeast and saved consumers $460 million in lower electric bills over the past three years, according to a report released Monday by Analysis Group, a Boston-based consulting company. The benefits came mainly from customer rebates and efficiency measures spurred by the program.
The six-year-old carbon trading market, the first in the U.S., may serve as a model for other states, which all must now regulate emissions to meet new rules from the U.S. Environmental Protection Agency. California already has its own market, while Pennsylvania and Virginia officials have discussed joining RGGI.
“There are a lot of states that are looking carefully at doing the same thing,” said Paul Hibbard, an Analysis Group vice-president and co-author of the study, in a telephone interview. “It will be hard for states to not realize that from the standpoint of economic efficiency, that’s the way to go.”
Carbon emissions in the nine participating RGGI states have dropped by about a third since the trading market opened in 2009, Hibbard said.
Not everyone was a winner: Power-plant owners lost almost $500 million in revenue from 2012 to 2014, due to both reduced electricity demand and the cost of credits they had to buy to emit greenhouse gases.
The report was funded by four private foundations that advocate for action on climate change and “sustainable energy,” including the Boston-based Barr Foundation and the Energy Foundation of San Francisco.
The cap-and-trade program is designed to curb pollution from power plants and each allowance gives companies the right to emit one ton of carbon dioxide.
The Northeast program was overhauled last year after demand for pollution credits proved weak. After reducing the amount of allowances available by 45 percent, prices increased, and with them, the incentive to cut emissions, proponents said. Pollution credits sold for $5.50 a ton in the latest quarterly auction on June 3, almost double the $3 they fetched before the cap was lowered, according to the RGGI website.
RGGI (pronounced “Reggie”) covers emissions from Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. Governor Chris Christie pulled New Jersey out of the market in 2011, saying it was driving up electric rates without providing any environmental benefits.