If I owned a power company in the Northeast, I might consider buying a few farm animals to turn their manure into energy. Or maybe I would plant some trees. Either one of these acts would qualify as a carbon offset under the Regional Greenhouse Gas Initiative (RGGI), the first mandatory carbon cap-and-trade system in the U.S.
Under this system, the power companies in the 10 participating states will be required, beginning in 2009, to cap their greenhouse gas emissions and buy credits for any excess emissions.
On the new, competitive U.S. market of carbon trading, one ton of carbon offsets sold at the inaugural auction held last week by RGGI (pronounced reggie) for $3.07. That price seems like a deal since a tonne (1.1 ton) goes for more than $30 in similar European carbon markets. And power companies ate up those initial carbon dioxide credits, with demand more than quadruple the supply.
Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont participated in last week’s bidding, while New York, New Jersey, New Hampshire and Delaware, will jump in on the next auction round slated for December 17.
The result from the first auction was nearly $40 million, which will go to energy efficiency initiatives and renewable technologies in the six bidding states.
It all sounds swell, and if this system works, it might be a model for a cap-and-trade program for the entire U.S. But consider this: The carbon dioxide emission limit for power companies in 2009 is set at 188 million tons, which is actually higher than last year’s emission levels . RGGI’s aim of a carbon emission reduction by power plants will not even begin until 2015, with only a 10 percent drop in carbon emissions by 2019.
So, although last week’s auction is encouraging, the target reduction is lower than what many environmental groups had hoped for. Western states are closely watching RGGI as they set up their Western Climate Initiative. In any case, I’m not going to sit back and just hope that RGGI takes care of carbon levels, because I know that there’s still plenty I can do to cut my own carbon footprint, even if I’m not a power company.
For a few easy ideas of what individuals can do to help, read “Ten Simple Tips for a Low-Carbon Lifestyle.”