Proposed Greenhouse Gas Regulations: High Cost, Little Benefit
In a letter hand delivered on September, 22, 2005, to Governor Romney and state officials, Associated Industries of Massachusetts (A.I.M.), the Commonwealth's largest employer association, joined other regional business and industry groups throughout the Northeast in questioning a proposed Regional Greenhouse Gas Initiative (RGGI) rule as expensive with questionable environmental benefits.
The RGGI proposal to reduce carbon dioxide (CO2) — a primary greenhouse gas believed responsible for global climate change — is a result of discussions among the six New England States, New York, Delaware, and New Jersey during the past two years. This proposal could be approved as soon as the end of the year if the Governors, including Governor Romney, reach agreement.
The goal for RGGI is to develop a model cap and trade program for carbon dioxide to reduce such emissions. Although CO2 emissions from power plants are the current focus of RGGI, in the future the program may be extended to industrial sources and other greenhouse gases.
While A.I.M. supports reducing greenhouse gasses on a national and international basis, the environmental benefits of a regional program reducing greenhouse gases are questionable or non-existent. Unlike currently regulated pollutants (particulates, nitrogen oxides, etc.), reducing CO2 has no localized effect — a pound of CO2 reduced anywhere in the world (or an increase of one pound of CO2 anywhere in the world) has a global effect, not a localized or regional effect.
From all sources, the US currently emits about 25% of the world’s CO2, but the RGGI region contributes only 5% of the US emissions. In fact, the largest increases in CO2 emissions are from developing countries, primarily China. Without national or international programs, any reduction from sources in the RGGI region will have no practical effects on global greenhouse gasses.
If adopted, the RGGI regulations will lead to increased electricity costs, which will significantly impact our economy since Massachusetts and New England already have the highest electricity costs in the nation — 52% above the national average.
Various analyses of a regional program indicate that rates for electricity could increase anywhere from 2% to 23% depending on various assumptions, in addition to any increases due to fuel prices or other cost drivers. The RGGI proposal also guarantees that the region will become more reliant on natural gas for fueling our power plants (already near 50%), decrease our fuel diversity, and exasperate the already high prices and supply concerns of natural gas, making the RGGI region unable to cope with supply interruptions.
Before and after the draft model RGGI rule was made public in August, A.I.M. strenuously questioned the need for the RGGI program at all, given its non-existent benefits and high costs, and aggressively criticized the draft provisions as vague and open ended in some areas, and overly demanding in others. Especially onerous is its failure to require all the RGGI states to adopt the rule before it becomes effective, and a failure to include a "sunset" should a national rule be enacted.
As a result of this serious situation, A.I.M. has worked with and joined business and industry associations in the RGGI states to oppose the current proposal.
