Newswise — Today's decision by Governor O'Malley to join an interstate initiative limiting carbon dioxide emissions has major national significance, says a University of Maryland expert, but next steps will decide whether the program lives up to its potential as a response to climate change. Maryland will join the Regional Greenhouse Gas Initiative, or RGGI, a cooperative agreement among nine Northeast and Mid-Atlantic states.
Matthias Ruth, director of the University of Maryland Center for Integrative Environmental Research (CIER) recently studied the economic and environmental impact of Maryland joining RGGI. The CIER study was conducted for the Maryland Department of Environment under a legislative mandate, and released in February. Based on the study's economic projections, Ruth and the research team concluded that Maryland's participation in the compact would have a modest positive environmental impact that would not translate into higher bills for electric customers. It was the first study to look at the economic and environmental effects of having a heavy coal-based electric generation state like Maryland join RGGI.
Ruth served as principal investigator of the CIER study, and is an economist specializing in environmental policy projections. http://www.puaf.umd.edu/faculty/ruth/.
RUTH QUOTES
Regarding the governor's decision to join RGGI, Ruth says"¦
"The move by Maryland to join RGGI places the state at the forefront among a handful of states, including California, and opens the door for more, and more ambitious legislation to limit carbon emissions." "This is yet another major step in the recent trend toward state-level action in the absence of federal leadership on climate change. But the real test of its long-term environmental and economic benefits lies in the way the program is actually implemented, which has not yet been fully determined."
"The next challenge will be to define the specifics of the current program in order to get the most environmental and economic benefits from it, then to build on it so that the state continues to cut its emissions and to restructure its energy sector. Along the way, Maryland must use its leadership role and partner with others nationally and internationally to find new ways to cut cost and improve benefits to society."
"The many decisions that now confront us must be made on the basis of the best available science, as well as on a broad consensus among stakeholders that current energy use and emissions are unsustainable and that desirable alternatives can be found. The complexity, urgency and irreversibility of climate change demand this. The new administration in Maryland seems to understand this and needs to make sure that the resources are there to follow through on it."
RGGIS STUDY DETAILS
Key Findings of RGGI Study: 1) The study estimates that between 2010 and 2025, Maryland's participation in RGGI would reduce the state's carbon dioxide emissions from electricity generators by roughly10 percent. For all the RGGI states, the impact of Maryland's membership would be to reduce emissions 4.3 percent beyond levels achieved if Maryland were not participating.2) In the aggregate, profits from electricity production would likely decrease by about 12 percent. Profits from electricity generation with coal-fired plants would decrease, while profits from electricity generated with oil- and gas-fired plants would rise somewhat. The report projects that retirement of generating plants would be limited to a small number of oil- and gas-fired facilities.3) Joining RGGI would have a slightly positive impact on the Maryland economy in both the short and long run, largely because of cost savings from more efficient energy use and the sale of unused emissions allowances. Electric bills would drop slightly for residential customers. Industrial customers who rely more heavily on electricity would see greater savings from efficiencies that lower power requirements, the report says.
At the direction of the legislature, the Maryland Department of Environment commissioned the study to assess the economic and energy impact of the global warming provision of the state's 2006 Healthy Air Act. The law calls for Maryland to join RGGI this year.
As a member, Maryland will be given an annual budget, or a cap, for carbon dioxide emissions. The state will then give electricity generating companies carbon dioxide emissions allowances. In the study, the researchers assumed that 75 percent of all the allowances will be divided among electricity generating companies for free, while 25 percent will be sold to generators in an auction run by the state. The proceeds from this auction are expected to fund energy efficiency measures.
Resources
The full report by the Center for Integrative Environmental Research (CIER), "Economic and Energy Impacts from Maryland's Potential Participation in the Regional Greenhouse Gas Initiative," is available online: http://www.cier.umd.edu/RGGI/documents/UMD_RGGI_STUDY_Jan07.pdf
A prior news release on the study is also available online: http://www.newsdesk.umd.edu/sociss/release.cfm?ArticleID=1394
As an entity within the University of Maryland Division of Research, CIER's unique strengths lie in its ability to reach across all colleges of the university to effectively assemble the state's best researchers to address pressing environmental, technological, economic and policy issues. CIER's unique role also helps leverage input from the many research organizations and other universities outside the University of Maryland.
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