Delaware’s 2019 carbon dioxide cap and trade goals have already been exceeded and we can now end a program that adds millions of dollars to our electric bills! National cap and trade appears to be dying and the Chicago Carbon Exchange closed its’ doors to carbon trading October 29. But Delaware joined with nine other states to create the Regional Greenhouse Gas Initiative (RGGI) which auctions permits to electric power plants to emit carbon dioxide. This local version of the cap and trade program, along with other policies, is driving generating capacity to non-RGGI states. Electricity generation in Delaware has gone from 82% of electricity use in 1995 to a projected 38% in 2014. As generation moves further from the point of use, transmission losses and grid congestion increases raising costs and reducing efficiency.
We have far exceeded the RGGI goal of 10% reduction by 2019. Plans already in place will reduce Delaware electric generation emissions by 34% compared to the RGGI base amount by 2014! The Governor can now declare victory and withdraw from the agreement and return the $15 million to $35 million/yr carbon tax to Delaware consumers. Governor Markell was recently quoted as saying no one has suggested abandoning RGGI. Let us be the first, then.
We didn’t arrive at this 34% emission reduction by the expected route. The intent was to replace fossil fuel production with renewable energy sources, and this does play a small role. However, the effect of renewable energy is swamped by market changes. A combination of power plant closings and substitution of natural gas for coal as fuel has been the primary force behind the lower emissions. Huge new natural gas fields have reduced fuel costs to the point it doesn’t make economic sense to build anything else but natural gas plants. Natural gas emits 57% as much carbon dioxide as coal and petroleum products for the same amount of electricity.
We understand the motivations and goal to reduce CO2 production. However, local actions such as RGGI simply leave Delaware less competitive than states and countries without such regulations. Delaware residents wind up with a slower growing economy, fewer jobs, and higher energy prices. There are other ways to boost conservation without these downside effects.
Furthermore, there is a certain futility to the RGGI goals. Delaware’s goal is to reduce emissions by 755,000 metric tons. China increased CO2 emission by 1.4 trillion metric tons from 2004 to 2008 so the Delaware decade long reduction goal is replaced by China every 68 seconds!
David T. Stevenson
Director of Public Policy
Caesar Rodney Institute
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