There is an effort underway to improve one of New England’s most impressive policy collaborations, the cap-and-trade program known as the Regional Greenhouse Gas Initiative, or RGGI. We should support it.

As The Boston Globe reported:

On Thursday, a coalition of more than 300 businesses, academics, and environmental and health groups sent a letter to the nine states involved in the pact, known as RGGI, to reset the cap to reach 20 percent below today’s emissions within eight years. Officials from the states are involved in a three-year review of the program.

Full disclosure: I used to work for one of the groups involved in this campaign. But that doesn’t change the fact that the advocates’ case is a strong one.

Background

It’s weird that it was only four years ago that cap-and-trade was supported by both presidential candidates, because these days no one talks about it. (I’m way bitter about this.) You can get an overview of how cap-and-trade works here. But, basically, you set a goal for how much you want emissions reductions to go down, as a percentage of total emissions. Then every emitter can either reduce their emissions by that percentage or, if they don’t want to, they can buy permits from those who have reduced emissions more than the goal. In this way, the market finds the most efficient places to reduce emissions; those who are able to most cheaply cut emissions end up doing so. In this way, a cap-and-trade program is agreed to be one of the cheapest ways to reduce emissions.*

Which brings us to RGGI… The program kicked off in the beginning of 2009, and Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont are all involved. (New Jersey recently bailed. Also, Romney opted not to involve Massachusetts originally but Deval Patrick changed this when elected.)

And as the Globe reports, “Greenhouse gas emissions from Northeast power plants are about 36 percent below a cap set in a landmark climate change pact.” That’s largely thanks to the abundance of cheap natural gas, plus the impact of the recession (less power required in weak economic times.) But the RGGI reduction goal was always very low, so reaching it is hardly a reason to declare victory on climate change.

Aligning RGGI With Existing Climate Goals

The original RGGI goal was a 10 percent reduction over a decade. But that goal is and was always too low. For instance, it’s much lower than both Boston’s and Massachusetts’ climate goals. The group of advocates cited above are calling for:

Adjust the cap to ensure that it reduces emissions 20% below current levels by 2020 and is on track to reduce emissions by, at least 80% by 2050

Such a goal would bring RGGI much more in line with the city and state’s necessarily ambitious goals (though not exactly; there are different baselines involved.)

Cap-and-Trade Is the Least Expensive Option

Let me say it again: cap-and-trade (or the other common carbon pricing mechanism, a carbon tax) is the most efficient way to encourage the deployment of low emissions electricity production. It’s favored by economists for a reason. It’s more efficient than giving people a tax rebate for putting solar on their roof, for instance.

If you agree we need to dramatically cut our greenhouse gas emissions quickly to deal with climate change (and you should), you’ll favor a carbon price at some level.

RGGI is an excellent if modest initial step toward making fossil fuel generated electricity reflect its true cost on society. Ramping up the RGGI goal to put it in line with necessary climate goals is a good idea.

*Some climate advocates criticize a focus on cap-and-trade as coming at the expense of clean energy R&D. Both are good ideas.

UPDATE: On Twitter, Jesse Jenkins, formerly of the Breakthrough Institute and a well known energy innovation wonk/advocate makes a good point. I’ve neglected to talk about the level of revenues collected or their use. Revenues are generated by auctioning off the emissions permits. As Jesse points out, that side of the equation is critical as well. In particular, that money can help fund clean energy research, development, and deployment.