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Cap-and-economic-growth

Our view: Maryland and others in a regional effort to lower greenhouse gas emissions demonstrate that carbon cap-and-trade can be good for the economy and environment

1:56 PM EST, November 15, 2011

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A burden on the working class. A jobs killer. A hidden tax on every purchase. That's' just some of the strong invective hurled at the concept of cap-and-trade programs by its politically conservative critics in recent years.

But a funny thing has happened to those 10 states, including Maryland, that actually signed onto what's known as the Regional Greenhouse Gas Initiative (RGGI) and started requiring power plant owners to purchase allowances for each ton of carbon dioxide they emit. A recently-released study of the program's first three years shows it's been a major boon to both the residents of those participating states and the economy.

How major? There's the surprise. According to researchers, the regional economy has gained more than $1.6 billion in economic value. That's not the gross effect but the net once researchers considered both cost and benefits to the economy.

But wait, wasn't the complaint from conservatives that a cap-and-trade program would raise electricity prices and therefore raise costs to households not only in energy costs but to every good and service? Researchers found that while it's true that RGGI payments can increase electricity prices in the near-term, there's also a lowering of electricity prices over time as states invest more money in programs that promote energy efficiency.

Even those households that have not caulked a single window or added insulation to a single attic share in that benefit as demand for electricity falls in the marketplace. On average, residential customers in RGGI states saved $25, commercial customers $181 and industrial consumers $2,493 each, according to the study by Analysis Group, an economic consulting firm.

While that reduced demand is not necessarily good news for energy suppliers, it is for their customers. The study estimates that it produced about 16,000 jobs for the region — and also notes that no power supplier went into the red as a result.

Admittedly, not every state had an identical rate of return. It depended on how they invested RGGI proceeds. Maryland, for instance, didn't have as large a rate of return as New England states that spent more on energy efficiency upgrades, but it still came out well ahead.

There are any number of lessons that can be drawn from this. But perhaps the most important is that as a market-based solution, a cap-and-trade program can work well and deliver real economic value to participating states.

The most obvious benefit is to reduce the region's demand for fossil fuel. It also translates into cleaner air as coal-fired power plants produce less toxic smoke. But there are also dividends provided to neighboring states — especially to the degree that RGGI reduces purchases from out-of-state power plants that, in turn, don't burn as much coal.

One can only hope that Congress might be paying attention to this. A similar program — even one that allows states to determine how proceeds are spent to address future energy needs — could work on a national level.

But first, it will require Republicans to acknowledge climate change is a real and pressing problem and that reducing greenhouse gas emissions ought to be a top priority. Of course, the GOP might also acknowledge that conserving energy, saving people money and reducing pollution are benefits of cap-and-trade programs as well.

Too bad that conservatives seem trapped in a catechism that insists all government regulations are harmful to the economy and that man-made global warming is a fallacy. That both views are so clearly refuted by the hard evidence at hand seems of little consequence to the deniers.

Incidentally, one of the places to benefit from RGGI was New Jersey where Gov. Chris Christie announced last May that his state would no longer participate in 2012 because he saw no economic or environmental benefit from continuing to do so. The study refutes that claim but does show a lesser return for the Garden State — but only because the majority of the proceeds were used to help balance the state's budget.

Perhaps a more realistic expectation is that other states — less encumbered by the closed-minded partisan politics of Washington (or led by governors that aspire to one day be the GOP presidential nominee) — will try to duplicate RGGI's success and offer similar regional programs drawing from the best practices demonstrated by RGGI participants.

Cap-and-trade isn't the jobs killer that the naysayers claimed but a boost to the economy at a time when jobs are at a premium. Even setting aside all the considerable benefits that come from lowering fossil fuel consumption and greenhouse gas emissions, that ought to be enough to spur others to join in.