Vt. officials lead on system for carbon emissions
By LOUIS PORTER Vermont Press Bureau | July 06,2008
MONTPELIER – Our small, cold state has had an outsized role to play on a hot issue: global climate change.
Vermont has been instrumental in shaping the Regional Greenhouse Gas Initiative, which is designed to help the Northeast aggressively cut its carbon pollution levels. Scientists say these emissions from fossil fuel consumption, such as vehicular traffic, contribute to global warming.
When a national climate change policy is put in place, it will largely be based on a cap-and-trade system for carbon emissions that Vermont has helped to develop.
Vermont's role is partly accidental: The state has little in-state fossil fuel generation and so has few power brokers in the sector influencing its energy policies.
But the state's role isn't only a matter of luck. Two Vermonters, Richard Cowart, who runs the Regulatory Assistance Project, and Jeffrey Wennberg, former commisioner of the Department of Environmental Conservation, have helped develop the Regional Greenhouse Gas Initiative, so far the most ambitious approach to limiting carbon pollution.
Because of their experience with the intiative, Vermont may be poised to play a national role as Congress inches closer to enacting legislation on global warming. The state is looking to benefit ratepayers instead of power companies under its carbon trading system, by investing in energy efficiency. Whatever national plan emerges may be modeled on this approach.
"I think the Vermont example has been not just a trail blazer, but a trend setter," said Michael Dworkin, a former regulator who is now at Vermont Law School. "I think it is going to have a really strong influence on the national debate. People in Bejing and people in San Francisco not only know but care what is happening in Vermont."
Unlike acid rain chemicals from power plants, which can be dealt with at least in part by adding pollution control devices to smokestacks, there is no cost effective way to control carbon dioxide levels, said Richard Cowart, whose Regulatory Assistance Project provides consulting services on climate change and energy around the world from Montpelier.
"There is no carbon scrubber at any reasonable cost you can bolt onto a power plant," said Cowart who recently spoke in the U.S. House on the issue. "We are demonstrating to the nation there is a large and available low-cost resource at close hand. Energy efficiency is the low-cost carbon scrubber."
Wennberg says consumers – not power producers – will be the beneficiaries if the country follows Vermont's lead.
"We were the first state to adopt rules governing the program. That was an enourmous advantage. We sort of pushed the envelope on a couple of issues," Wennberg said. "Vermont was thinking five years down the road because we had the freedom to do so."
First a few points about how carbon credits, cap and trade systems and climate change pollution are supposed to work.
Man-made climate change, it is thought, is caused by an excessive amount of carbon dioxide and other gases released – mostly when fossil fuels are burned – into the atmosphere. Since this carbon has unnaturally been released in a short period of time there is a greater concentration in the atmosphere resulting in changes in the air envelope around the planet and, eventually, in the climate.
Whether you believe in the science and predictions of global climate change or not, most governments in developed countries have decided the problem is worth addressing. One of the most efficient ways to attack the problem would be to limit emissions from coal-, gas- and oil-fired electricity power plants. The plants account for a large portion of the problem (38 percent of carbon emissions in the United States), they are often already regulated by the government, and there are a relatively small number of them.
So how are power plant emissions controlled?
Experts say the best way to do it is through cap-and-trade agreements. For one thing, such agreements have already been used in Europe and in the United States for acid rain. Cap-and-trade systems essentially offer credits to plants that keep their emissions below a certain level. These credits then can be sold to other plants that have failed to meet the limits.
The U.S. Senate recently debated a national cap-and-trade system that would do just that, but the system is unlikely to become law this year. But if it passes eventually, it will be influenced by the Northeastern states that have already created a cap-and-trade system through the Regional Greenhouse Gas Initiative. The initiative bypasses federal authorities by creating a voluntary cap-and-trade agreement.
Vermont has had a large, unheralded role in the creation of the voluntary cap-and-trade agreements udner the Regional Greenhouse Gas Initiative.
Former Rutland Mayor Jeffrey Wennberg might have seemed an unusual figure to play a key role in Vermont's contribution to climate change policy. Some environmentalists were skeptical when Wennberg, a Republican, was appointed commissioner of the Department of Environmental Conservation.
As it turned out under the Regional Greenhouse Gas Initiative – called RGGI (pronounced Regi) – state environmental agency heads played a central role in determing how the system would work.
So Wennberg found himself at the wheel of Vermont's subcompact car among the semi-trailer traffic of states like Massachusetts and New York.
And the state had a couple of major advantages, Wennberg said recently. First of all Vermont has virtually no carbon-producing power plants. (One exception: Green Mountain Power owns a small diesel-powered "peaking" plant in Berlin that operates when demand spikes.)
While other states faced pressure from power producers within their borders, Vermont regulators and politicians had the luxury of just worrying about ratepayers and voters.
Vermont had another distinct advantage: As a state it was committed early and fully to the idea of tackling climate change. Consequently, the state was in a position to act nimbly.
Once New York Gov. George Pataki started pushing the idea of RGGI – based in part on climate change goals established by Vermont's Gov. James Douglas and the other members of the New England Governors and Eastern Canadian Premiers – Vermont was the first state to sign on. It became the first state to pass legislation (since RGGI is a cooperative venture, the General Assembly of each state must pass a law authorizing the agreement).
In Vermont's case, signing on first paid off because each state in the RGGI agreement was given an equal spot at the table, a big bonus for a small state like Vermont, Wennberg said.
"We are a little bit like the mouse that roared," he said.
Douglas and lawmakers were both committed to the RGGI idea, Wennberg said.
"Despite the difference in parties we're on almost precisely the same page," he said. "The legislation that was crafted to support the state's involvement in RGGI was unique in my experience. Every single party, the governor, the governor's staff, the chairs of the relavent committees, the legislative leadership, were going to extraordinary lengths not to screw it up."
The upshot was that several of Vermont's priorites won out.
First of all, unlike the European carbon cap system in which the carbon credits were given to power producers who got the money when they were sold, Vermont urged that at least some of the credits be held by states to be sold or used for the benefit of consumers.
Secondly, Vermont urged that money from that sale be committed to energy efficiency as the most cost effective way to curb carbon pollution.
Vermont's RGGI legislation required that 100 percent of the credits allocated to the state benefit consumers, and all of the money from their sale go to efficiency.
Vermont appears to be the first jurisdiction to commit all of its sales from carbon credits to consumers and to efficiency. Ultimately the other states in the agreement followed suit.
"Those two points are starting to be accepted as the new standard model for cap and trade," Cowart said.
That doesn't mean Vermont got everything it wanted. Wennberg and others argued for a system that would be based on how much fossil-fuel-generated electricity is used, not produced, creating an automatic incentive for saving electricity. This approach would have prevented "leakage" – that is it would have required the RGGI states that buy power from outside the region to take responsibility for the carbon emissions that resulted from that purchase.
But no similar requirement under a cap-and-trade system has been tried. Ultimately the system put in place through RGGI is based on power production in each state.
Because power contracts for Vermont Yankee and Hydro-Quebec expire in a few years, Vermont may find itself buying more power from fossil fuel sources. In case that happens, Wennberg and others argue that Vermont should be allocated more carbon credits that it would have received based strictly on how much fossil fuel power is produced within its borders. The state will get roughly enough credits to replace one of those sources – each of which provide about a third of the state's electricity.
If both power generators continue to operate and sign new contracts with the state that will still leave Vermont with carbon credits to sell for cash – which it would invest in efficiency.
RGGI has kinks that need to be worked out, said James Moore of the Vermont Public Interest Research Group.
One worry, for instance, is whether so many carbon credits are being offered that the program will not be effective at reducing carbon pollution as quickly as possible.
Still, Vermont has set a good precedent, Moore said.
"We really kind of led the way in terms of putting a cap-and-trade system in place that requires polluters to pay and putting that money to work," Moore said.
"We have successfully started to reduce our electricity demand through energy efficiency. We have eliminated any demand in growth," Moore said.
A compromise reached between the Legislature and Douglas this year to implement a heating fuel efficiency program will go even further, he said.
"When we are able to successfully implement a building efficiency program that looks not just at electricity but pollution from heating that will be an incredible model for other parts of the country to follow that will dramatically reduce our global warming pollution," he said.