POWER October 2014 - 72

COMMENTARY
Collaborating to Build a
Cleaner Energy Infrastructure
Kelly Speakes-Backman
E
very day there is increasing evidence that we need to accelerate
our nation's transition to a cleaner energy infrastructure.
The American Climate Prospectus released by
the Risky Business Project states that a " business-as-usual " approach
to energy use creates serious economic risks. The U.S.
Environmental Protection Agency (EPA) recently proposed a new
rule requiring states to reduce carbon pollution from the nation's
existing power plants. The Obama Administration has issued its
Fifth National Climate Assessment, asserting that climate change
and its effects are present today, not some time off in the distant
future.
Whether we are ready or not, we are faced with circumstances
that require action. Fortunately, we have powerful tools at
our disposal to take that action-tools that industry and state
governments can use together to reduce carbon pollution and
hasten our transition to a cleaner energy infrastructure, at the
lowest possible cost.
Several proven cost-effective tools for accelerating this transition
are already in practice. Renewable portfolio standards,
energy efficiency policies, green banks, building codes and standards-these
and other programs have demonstrated that we
can develop our clean energy infrastructure without detriment
to grid reliability or the economy.
Case in Point: RGGI
One program that has proven to be particularly effective is the
Regional Greenhouse Gas Initiative (RGGI). Developed through
a collaborative multi-state and multi-disciplinary process, and
enacted with bipartisan support, RGGI is a field-tested, proven
model for cost-effectively reducing carbon pollution while generating
economic benefits.
RGGI proves-and not for the first time-that regional, market-based
pollution reduction programs work. One of the first
regional pollution reduction programs, the EPA Acid Rain Program,
served as a prototype for the RGGI program. The Acid Rain
Program realized its goal of reducing sulfur dioxide and nitrogen
oxide pollution at one-quarter of the original estimated cost.
The success of this regional pollution reduction program has
been replicated in RGGI. Since 2005, the RGGI region has seen a
40% drop in power sector carbon emissions, even as its regional
economy has grown by 7%. In fact, the RGGI state environmental
and economic regulators decided to strengthen RGGI in 2014
by locking in those reductions and moving forward with changes
that will help further reduce the region's projected power sector
carbon pollution in 2020 to levels almost half that of 2005.
These changes are also projected to add more than $8 billion to
our economy.
RGGI and other regional market-based programs are designed
to be cost-effective. RGGI's regional market-based approach relies
directly on market forces to encourage states and the power
sector to find the least expensive pollution reduction opportunities.
This approach takes advantage of the regional nature of
72
the electricity grid and complementary individual state energy
policies, while also channeling capital to strategic energy initiatives.
These initiatives can include technology upgrades at the
plant itself, new renewable energy facilities, energy efficiency
projects that reduce energy demand, or even direct consumer bill
assistance. Allowing carbon pollution reduction strategies to be
tailored to each state's unique circumstances results in a more
diverse (and effective) set of projects, which directly benefit the
individual objectives of each state and maximize the value of
investment for the region.
RGGI's market-based approach has also yielded positive economic
benefits for the region. The RGGI states distribute most
of the allowances that provide the power sector with the right
to emit carbon dioxide via auction. These auctions generate
revenues that are reinvested into energy efficiency, renewable
energy, and other clean energy infrastructure programs. These
programs help create local jobs and grow the region's economy
while helping businesses and families save money on their energy
bills, reducing overall demand for electricity, and reducing
the need to import fossil fuels into the region.
An independent report by The Analysis Group found that,
through the end of the decade, RGGI proceed investments generate
$1.6 billion in net economic benefits, put $1.3 billion in
energy bill savings back into the pockets of consumers, and create
16,000 job-years in the region. By using funds from the program
to invest in clean energy infrastructure, RGGI has demonstrated
that regional market-based programs not only reduce carbon pollution,
but they also can generate significant economic benefits.
The Value of Collaboration
Regional market-based programs like RGGI provide a proven
model to cost-effectively reduce carbon pollution while maintaining
grid reliability and growing our economy. But perhaps as
importantly, they show how important it is to collaborate across
regions and across professional disciplines as we work to build
this new infrastructure.
RGGI was launched thanks to a 2003 letter sent by then-New
York Governor George Pataki to other governors in the region,
both Republicans and Democrats. The RGGI states are diverse,
with different energy demands, natural resources, power profiles,
regional transmission organizations, and economies. Yet
the states have been able to work together to implement RGGI
successfully. It has not always been easy, but this collaboration
has resulted in a program that is cited by power plant owners
and environmental nonprofits alike as a national model.
What our experience demonstrates is that we can reduce carbon
pollution without detriment to grid reliability or the economy
and ultimately deliver a cleaner energy infrastructure. But we
can't do it alone. We have to do it together. ■
-Kelly Speakes-Backman is commissioner of the Maryland
Public Service Commission and chair of the RGGI Inc. Board of
Directors.
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POWER October 2014

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