They call it the Regional Greenhouse Gas Initiative, a model rule issued Aug. 15 by officials of seven Northeastern and Mid-Atlantic states which if adopted by lawmakers will require electric powerplants to reduce carbon dioxide emissions by 10% by 2020.
|Is the model rule on emissions largely symbolic?|
A cooperative effort among Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont, the model rule would require power generators to participate in a regional cap-and-trade program to cut emissions of carbon dioxide from some 600 powerplants.
If it is adopted as state law and enforced, the rule could shape the way the region's utilities and independent power generators invest in future projects, industry executives say.
And while no one believes such a modest goal will do much to slow the effects of global warming, the message it sends could be significant.
"This [model rule] is more symbolic than substantial," says Frank Maisano, spokesman for the Electric Reliability Coordinating Council, Washington, D.C. While the projected CO2 emissions reductions are modest and will do little to impact the volume of greenhouse gases on a global scale, the concerted effort of the states involved sets a new precedent for future policy, Maisano says.
The states issued the rule Aug. 15 after two years of discussion and planning involving state officials and environmental departments, power providers and stakeholders. Maryland will become a full participant in the process next summer, while the District of Columbia , Massachusetts, Pennsylvania, Rhode Island, the Eastern Canadian Provinces, and New Brunswick are observers in the process.
The initiative is the first of its kind involving so many states with the possibility of establishing CO2 emissions reductions to counter global warming. "The RGGI region represents probably 3% of the world's greenhouse-gas emissions, so it is not going to have a huge impact," says James Brooks, director of air quality for Maine Dept. of the Environmental Protection. "The idea is to set an example and to establish a working model that could be used nationally."
Now that the rule has been issued, participating states must begin legislative action supporting the rule. Whether and how soon that will happen isn't yet clear.
Under the rule, emission levels will be capped at the average emissions level between 2000 and 2004. Electricity generators must then reduce CO2 emission by 10% between 2009 and 2020. Each state will grant pollution allowances to electricity generators and charge fees for at least 25 % of each company's allowance. Electric companies that exceed allowances must either install new emission control equipment and upgrade facilities or purchase pollution credits from other companies that are below their allowances.
While there is no retrofit "scrubber" technology applicable for CO2 reduction as there is for reduction of nitrogen dioxide and sulphur dioxide, coal-fired plants can reduce CO2 emissions by "improving process efficiency, or retrofitting plants for dual-fuel capability" to enable burning of natural gas or ethanol along with coal, says John Wadsworth, partner with attorney Brown Rudnick, Boston, which is serving as an advisor to power companies affected by the rule.
Powerplants that don't comply with the new emissions standards can purchase allowances that will be distributed to support energy conservation, fund RGGI, foster renewable energy, mitigate ratepayer impacts and similar objectives, Wadsworth says.
In the long term, the mandated compliance is projected to spur a market in the region for alternative energy sources such as wind and nuclear and for integrated gasification combined-cycle plants (IGCC), which gasify coal and remove pollutants before combustion occurs, say industry executives. "In the Northeast you can no longer build gas plants, [gas is] just too expensive," says Curt Morgan, executive vice president at Princeton, N.J.-based energy provider NRG. "You can expect to see IGCC plants replacing older coal plants. About 25% of plants won't be able to comply, so companies will be investing either in new IGCC plants or combined cycle plants.
NRG already has three IGCC plants planned for construction in Delaware, Connecticut and New York. "Our company believes there should be a reduction in CO2 emissions and that there soon will be federal regulations, but the devil is in the details." NRG also this year has purchased a wind power development company and is exploring methods of capturing and sequestering CO2 emissions.
But reducing CO2 emissions comes at a cost. "There is likely to be a price impact," says Ellen Raines, spokeswoman for Akron, Ohio-based energy provider FirstEnergy. "Companies will be making investments to comply, or shutting down older plants," and those costs will be passed to the consumer. Price hikes will vary across states, but "there will be price increases of as much as 2% or more," says Morgan.