October 9, 2008
Paying to Pollute Will Reap a Cleaner Future
When it comes to reducing greenhouse gas emissions and stemming climate change, there's really only one way to force compliance by fossil fuel-burning power plants: Hit 'em where it counts - their bank accounts.
That's the theory behind the nation's first cap-and-trade greenhouse gas auction, which brought in nearly $40 million for the six states that participated last month, the results of which were released last week. Massachusetts raised $13.3 million from the first quarterly auction, which requires power plants and other fossil fuel burners to bid for the right to emit carbon dioxide, the leading cause of global warming. The first auction settled at a price of $3.07, the amount emitters must pay per ton of carbon spewed into the atmosphere. All 12.5 allowances were sold to 59 bidders, mostly power producers. The next auction is slated for December.
The 10 states that make up the Regional Greenhouse Gas Initiative - all six New England states and Maryland, New York, New Jersey and Delaware - will reinvest the auction profits in renewable and energy- efficient technologies.
The initiative is a model for a potential national program to cut greenhouse gas emissions. The success of last week's auction - which drove the price up 65 percent from the minimum set at $1.86 per ton - should only accelerate those plans.
The results are twofold. Power plants are given a financial incentive to cut their emissions, and states fund research to find cleaner sources of energy. It is poetic justice that the largest polluters will actually fund research that aims to one day put them out of business or at least force them to change.
Critics say the program will only hurt consumers, fearing power plants will simply pass the added price on to their customers. But state public utilities commissions, which regulate the energy industry, can prevent such an end-around by refusing to grant rate increases for emissions purchases, ensuring the polluters' profits take the hit.
Even if some state utility agencies allow partial rate increases, the initiative can still work. While consumers may pay a bit more, they'd be helping fund critical research - a worthy use of their money - and have an extra incentive to conserve.
Perhaps consumers should pay part of the price because we are part of the problem. Everyone is. While it's easy to point the finger at dirty power plants - which indeed deserve their share of the blame for the environmental crisis the world is facing - the fact is they wouldn't exist without consumers' insatiable demand for energy and society's historic reluctance to find a better way to create it.
The Regional Greenhouse Gas Initiative provides a creative way to do just that, and should be a blueprint to expand across the country.
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