www.baltimoresun.com/features/green/blog/bs-gr-new-emissions-cap-20130207,0,1046368.story

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Tighter greenhouse gas limits adopted for Md., Northeast

Regional initiative cuts power plant emissions cap by 45 percent

By Scott Dance, The Baltimore Sun

5:22 PM EST, February 7, 2013

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A consortium of Northeastern states including Maryland has agreed to reset a power plant emissions cap to current levels and to tighten it annually starting in 2015, an action officials said would increase investment in energy efficiency and slightly raise electricity prices, besides cutting pollution.

The change amounts to a 45 percent reduction in the cap's ceiling, which has far exceeded actual pollution levels because of improved energy efficiency, increased renewable power generation, mild weather and the slumping economy. The Regional Greenhouse Gas Initiative announced Thursday that its nine member states had agreed to the cut, with input from other stakeholders.

Environmental advocates and business leaders both welcomed the revision, saying it would strengthen efforts to address climate change and reward investment in clean energy. Some said the first-in-the-nation cap-and-trade initiative, known by its acronym RGGI, could also prompt more action to cut carbon emissions on a national level, as President Barack Obama has vowed to make climate change a top priority of his second term.

"They're locking in the reductions that have taken place to date and ensuring that RGGI will continue to drive reductions in pollution going forward," said Peter Shattuck, director of market initiatives for Environment Northeast, a Maine-based advocacy group. "It's noteworthy especially now as Obama has been re-elected, and in the wake of [Superstorm] Sandy, for RGGI states to get out and lead on this. They are helping cause the pendulum to swing back on climate."

The initiative launched in 2008, requiring power plants to buy carbon dioxide emissions allowances `in regular auctions. The initial cap was set so loose that it allowed plants to buy allowances at low prices and save them for future needs. Over the past few years, allowance auction prices have declined along with emissions levels and electricity prices.

The new cap reduces the 2014 emissions cap from 165 million tons of carbon dioxide to 91 million tons — about what was expected to be the emissions total for 2012. The cap would then decline by 2.5 percent each year from 2015 to 2020.

The Maryland Department of the Environment will now set out to revise regulations for power plant operators around the state, to reflect the new cap, said Kathy M. Kinsey, deputy secretary of the agency.

A spokesman for Exelon Corp., which owns Baltimore Gas and Electric Co. and a handful of power plants in the Baltimore area, said in a statement the company "supports market-based approaches to addressing climate change, as well as the effort to maintain and improve the RGGI program."

Other business groups, with members including companies like Timberland, Ben & Jerry's and eBay, welcomed the new cap.

Some criticized it, however. The New Jersey chapter of Americans for Prosperity called the new cap "a massive tax hike" on electricity bills. New Jersey was an original member of the regional initiative but left in 2011 as Republican Gov. Chris Christie called it a "failure" that would not reduce greenhouse gases.

Auction prices power plant operators pay could rise if demand for the allowances reverses course and increases, which could mean higher electricity prices. Models that initiative organizers used in reaching their agreement showed an average monthly bill effect below 1 percent, a figure that includes the benefit of investment of auction proceeds into energy-efficiency programs, according to state environmental officials.

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