It’s not about reducing carbon dioxide emission or reducing global warming.
The experience of the Regional Greenhouse Gas Initiative (RGGI) in the northeastern United States shows us once again that the point of cap-and-trade is to generate tax revenue and not to reduce carbon dioxide emissions or global warming.
Currently there is one operating cap-and-trade program for carbon dioxide in the U.S.—the Regional Greenhouse Gas Initiative. On Monday it was reported the demand for CO2 allowances had crashed at the latest RGGI auction. If the goal of RGGI were to reduce CO2 emissions, this would be hailed as good news. Lower prices mean that demand is down for the necessary CO2 permits. This should be good news.
RGGI’s website describes RGGI as, “is the first market-based regulatory program in the United States to reduce greenhouse gas emissions. Ten Northeastern and Mid-Atlantic states have capped and will reduce CO2 emissions from the power sector 10 percent by 2018.” [emphasis added]
The good news is that carbon dioxide emissions in the RGGI states have already far exceeded RGGI’s goals. In fact, carbon dioxide emissions from power plants are down by more than 30 percent—three times more than RGGI’s goals.
RGGI’s proponents should be ecstatic, right? After all, the goal has been achieved. In fact, since the stated goal has been achieved three times over, it would makes sense to declare victory and end the program. But that isn’t happening.
Instead, RGGI’s proponents, such as David Littell, the Maine Public Utilities Commissioner, argues, “The RGGI states have put a price on carbon to foster innovation in our region. . . The RGGI auctions are continuing to drive large-scale investments in energy bill savings and improved business competitiveness.”
In other words, RGGI is a tax. By putting a “price on carbon” RGGI generates tax revenue that is spent by bureaucrats on pet projects such as energy efficiency projects that some business would not spend personal or company money, but are more than willing to undertake the projects with ratepayer’s money.
The bottom line is that carbon dioxide emissions have dropped precipitously is not because of RGGI or putting “a price on carbon.” The reason carbon dioxide emission have dropped is because of the rise of shale gas and the poor economy. As E&E News reported, “the consultancy ICF International has told RGGI members that their system isn’t contributing to lowering emissions in the Northeast, nor would it ever, unless the current cap is slashed by at least one-fourth.” [emphasis added]
The situation with RGGI shows what we said all along about cap-and-trade. It’s a tax—a great big tax as Rep. John Dingell described it. We are much better off as a country to have avoided a nationwide carbon tax.