Friday February 8, 2013

BOSTON -- Nine northeastern and mid-Atlantic states agreed Thursday to strengthen existing limits on carbon dioxide emissions from power plants that burn fossil fuels.

The new rules announced by the Regional Greenhouse Gas Initiative would lower the cap on carbon dioxide emissions from the current 165 million tons to 91 million tons in 2014 -- a 45 percent reduction from 2005 levels. The cap would be lowered an additional 2.5 percent per year from 2015-2020.

The RGGI cap-and-trade program is the nation’s first market-based regulatory program for greenhouse gases. It requires power plants that generate more than 25 megawatts to purchase an allowance for each ton of carbon they emit. The allowances can be bought and sold among plants, giving companies a financial incentive to operate more cleanly.

The proposed changes -- which each state must ratify either with new regulations or legislation -- aim to bring the cap more in line with current emission levels that have declined substantially since 2005, in part because many plants have switched from coal to natural gas.

Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont participate in the initiative. They use revenue generated by auctions of the permits to fund so-called green energy programs.

In Maryland, for example, proceeds are used for programs including energy efficiency, low-income energy aid and renewable energy. RGGI predicted the changes would generate $2.2 billion in new revenue for the states through 2020.

While intended to serve as a national model, the regional initiative has largely failed to take hold in most of the rest of country. Efforts to implement cap-and-trade proposals on the federal level have also not been successful.

Opponents of the programs have said they hurt the economy when power plants pass the cost of buying emissions on to customers. New Jersey Gov. Chris Christie dropped out of the program in 2011, saying the agreement had failed to cut pollution and was a burden to taxpayers.

The RGGI, however, expects the price of carbon allowances to rise from $4 to $10 by the end of the decade, resulting in a less than 1 percent increase in the average electric bill.