By: Lila McNamee, Kellen Carpenter and Eric Vo
Image courtesy of Unsplash
Critiques of RGGI and Conclusion
The RGGI program is subject to many criticisms from organizations who do not view a regional carbon tax system as a clear path forward. Some view the RGGI program as having no health benefits or emission reduction benefits to speak of, and lament the fact that the economic gains associated with RGGI do not have much impact on energy efficiency or lowering electric bills for the region. In fact, one study found that RGGI allowance costs added to already high electric bills, which resulted in a 12% drop in goods production and a 34% drop in the production of energy-intensive goods for the RGGI states. RGGI states saw huge losses in their energy related businesses, which directly correlates to a loss of jobs in that sector. Further critics cited the fact that the regional program caused jobs to be shifted to other states, which were not limited by the initiative. Many who have a more conservative view of how to reduce emissions state that encouraging innovation is the only way to move forward into a cleaner-energy future. Finally, critics cite that RGGI states experience price increases and the carbon initiative negatively impacts their GDP, which can be directly compared to the fact that states not involved in the RGGI initiative saw their economies growing 2.4 times as quickly as RGGI states.
An equitable policy ensures that people of all races, genders and socioeconomic classes receive the same benefits from what the program produces. In the case of RGGI, that entails the distribution of the funds raised during the carbon auctions. As of 2021, the total amount raised by these actions was $4.7 billion shared between the member states. The states distributed these funds differently, though all states contributed a great portion of their funds to energy efficiency projects which has resulted in $1.9 billion in lifetime energy bill savings. However, there is no statute within RGGI’s legislation that guarantees emission reductions in ‘environmental justice communities’. These communities include those of color, indigenous communities, and low-income communities which have all been disproportionately impacted by power-sector carbon emissions. It had also been recommended that RGGI begin an equity analysis to determine where reductions are taking place to see if environmental justice communities are seeing positive impacts. Overall, there is very little data about equity in RGGI states, but based on how the policy was written, there is definitely space to make improvements.
Critics have argued that the best way to achieve energy efficiency and limit emissions is not by implementing a tax, but by encouraging innovation in carbon producers. While innovation is incredibly important and a necessity moving forward, a tax puts concrete pressure on carbon producers and established real-world consequences for pollutants. ‘Sustainable innovation’ should not be tossed around as a phrase for carbon producers to ignore, it should be used as the carbon tax is implemented and producers must figure out how to adapt to the new market. This would include creating new jobs in clean energy sectors whether it be by developing new technologies to avoid producing pollutants, or to try and improve already existing routes to energy efficiency. Critiques also often focus on the regionality of RGGI and how difficult it is to approach carbon emissions without a national consensus. This is accurate, and while various political agendas exist on the national scale, regional initiatives like RGGI are of paramount importance. It is difficult to standardize a carbon tax at a national level, however, the states who implemented RGGI can use it as a foundation to create further initiative models. Many clean energy advocates agree that RGGI’s design is worth emulating for future regional programs. RGGI also has a system of program reviews every three years where members review its impact and design to ensure RGGI is functioning correctly and can adjust to changing circumstances. This allows the initiative to be adaptable. Furthermore, lawmakers in member states focus on the fact that society needs to acclimate to initiatives, like RGGI, which will allow for more of them to be created in different regions. Based on the fact that 57 national or subnational carbon pricing programs exist, and draw on the creation and lessons of RGGI, it seems that such a carbon tax is actually working.
Through RGGI, the Northeast and Mid-Atlantic states that participated in the program have achieved significant drops in carbon dioxide emissions and cut back on other air pollutants. Carbon emissions from power plants in RGGI states have fallen by 47% since 2009 (surpassing the rest of the country by 90%) and have generated $4.7 billion from emission and allowance sales. Contrary to what critics have said, electricity prices in RGGI states have fallen by 5.7%. The RGGI program was a bold step, but a necessary step when considering the necessity of reducing carbon emissions. The United States needs many more such initiatives to be established in the future, in order to protect the environment and create a more equitable, lucrative and safe clean energy future.