December 20, 2005

Northeast Governors Sign Landmark Global Warming Pollution Pact
Bipartisan Emissions Accord is National Model; Has Strong Business, Public Support

ALBANY, NY - Governors of seven Northeast states today unveiled a pioneering bipartisan accord that will cut heat-trapping global warming emissions from the region’s power plants and create new investment in cleaner, more efficient energy technology. Along with new pollution limits, the plan will use a market-based strategy that rewards smart companies for outperforming the new pollution limits and lowers overall compliance costs.

“This bipartisan initiative is a vital turning point not only in these seven states, but for the country as a whole. It is a straight-forward, highly cost-effective approach that’s good for consumers, good for the economy and good for the atmosphere,” said Dale Bryk, senior attorney at the Natural Resources Defense Council (NRDC). “It is definitely the shape of things to come.”

Under careful development for more than two years, the accord includes Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont. Pennsylvania, Maryland, the District of Columbia, and five Canadian provinces have been close observers in the process, and states including California, Oregon and New Mexico have all announced plans to pursue a similar approach.

“The governors have crafted an innovative and effective strategy to meet the global challenge posed by climate change,” said Christine Vanderlan, global warming program director with Environmental Advocates of New York. “We applaud their leadership in confronting this critical issue.”

The plan also has federal ramifications. Although the Bush administration has steadfastly rejected concrete cuts in emissions – and last week caused a stir when its hand-picked delegation walked out of an international climate treaty negotiating session – there is growing pressure within both parties to adopt national legislation limiting heat-trapping pollution.

“The northeastern states are taking the lead on a tough problem, while bringing real benefits to the region. The incentives for greater energy efficiency will make the region’s economy stronger while avoiding needless pollution,” said Fred Zalcman, executive director, Pace Law School Energy Project. “This is a tremendous example for the nation.”

Getting Ahead of the Curve

Known as the Regional Greenhouse Gas Initiative (RGGI), the accord takes effect in 2009, and will reduce carbon dioxide pollution to a level 10 percent below current emissions by 2019. The policy is expected to lower utility bills by helping consumers and businesses use energy more efficiently. It will also give industry in the Northeast a competitive edge as national global warming pollution limits take shape.

“By putting forward this plan that will stabilize and begin to reduce global warming pollution from power plants, the governors are setting a remarkable precedent. We look forward to working with New York officials to ensure the final rules achieve the promise of reducing pollution from power plants while maximizing the economic and environmental benefits to the region we get from the smart and efficient use of our energy sources,” said Jason K. Babbie, environmental policy analyst for the New York State Public Interest Research Group.

Business Backing

Leading companies operating in the region including Bank of America, Staples, Keyspan, National Grid, Pfizer, Entergy, and the association of large energy users called The Energy Consortium have all backed the idea. Resistance came mainly from the owners of large coal-fired power plants who will now be required to clean up their emissions, or to finance somebody else who can.

“A small group of big energy companies are dragging out the same tired arguments in opposition because they have a vested financial stake in business as usual,” said Vanderlan. “Being in the lead on clean energy is good for the Northeast economy and the people whose jobs depend on it.”

A recent analysis commissioned by the governors predicted the state climate accord would actually save typical residential customers about $50 per year at current levels of state energy efficiency investment. And the researchers concluded that states could more than double those household savings by using funds raised by the new initiative to increase efficiency investment and incentives even further.

Market-Based Strategy Unleashes Innovation

Under RGGI each state will have its own emissions limit based on an overall regional objective, and will regulate only the power plants located within its boundaries. Companies that find ways to reduce pollution cheaply will need fewer pollution permits and can sell excess “allowances” at a profit to companies that can’t – an incentive structure that rewards rapid innovation while cutting overall costs for everyone.

This approach is similar to the highly successful program introduced by President George H.W. Bush in the early 1990s to address the acid rain problem. That program has achieved better results at a much lower cost than even optimists estimated at the time of its launch.

The Northeast program would also allow states outside of the region to participate, and might eventually be extended to cover not just power plant carbon dioxide emissions, but all stationary global warming pollution sources, as well as additional heat trapping emissions such as methane.

Next Up: The Details

A great many of the finer details of the plan remain to be worked out, and groups will be working to ensure regulators hold firm against special interest pressures. Consumer and environmental groups that have worked hard to prevent government negotiators from yielding to special interest demands say they will continue bird-dogging regulators to make sure that RGGI achieves maximum results.

“The states have a great opportunity to demonstrate how to reduce global warming pollution while actually making energy more affordable for consumers by promoting energy efficiency,” said Babbie. “We will be working to ensure that the final rules deliver on this promise.”

The governors’ announcement comes just five days after scientists with the World Meteorological Organization revealed that 2005 is the second hottest year on record, continuing a dangerously rapid warming trend that experts say can only be explained by rising levels of heat-trapping pollution in the atmosphere.