Yes, States Can Cut Carbon Emissions and Boost Their Economy

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Massachusetts Benefits From Its Efforts to Cut Carbon Emissions

States worried about whether the EPA’s new Clean Power Plan will hurt them economically can breathe a sigh of relief, says a new report.

The report, from Analysis Group’s electric industry and economic experts, “EPA’s Clean Power Plan: States’ Tools for Reducing Costs & Increasing Benefits to Consumers,” found that states are prepared to meet the plan. What’s more, states that are already cutting carbon emissions with energy efficiency investments are seeing big economic benefits.

The EPA’s proposed Clean Power Plan would regulate carbon emissions from existing fossil-fueled power plants using EPA’s existing authority under the Clean Air Act. The draft rules, due to be finalized next year, outline a variety of market-based and other approaches states can choose from to cut greenhouse gas emissions from power plants.

States now benefitting from cutting carbon emissions include those in New England that take part in the Regional Greenhouse Gas Initiative, the report said.

“Experience shows that states that work together on market-based compliance initiatives – like RGGI in the Northeast – can provide net economic benefits in terms of jobs and economic output,” said a press release. “And RGGI shows that each state can have control over its own program design, so that combined efforts don’t step on states’ rights.”

RGGI is a market-based program in New England that reduces greenhouse gas emissions. Under the program, each state’s CO2 budget trading program limits emissions of CO2 from electric power plants, issues CO2 allowances and establishes participation in regional CO2 allowance auctions. The states invest the proceeds from auctions in energy efficiency and other programs that benefit the public.

“Our analysis showed that every state in RGGI benefits from investments in energy efficiency,” said Paul Hibbard, vice president of Analysis Group. “The states that invested most in efficiency derived the greater economic benefits.”

Massachusetts spent almost all its RGGI proceeds on energy efficiency, and yielded the biggest economic benefits, said Hibbard.

“In terms of the economy and jobs created, Massachusetts did very well,” he said. “It spent virtually all its money on energy efficiency and got the best economic bang for the buck in terms of increases in economic activity, dollars available to the economy, and jobs created.”

In addition, the report found that states have a number of ways to comply with the proposed Clean Power Plan.

“States have the flexibility to design it in the manner best for them,” said Hibbard. “If the state wants to develop a compliance plan that maximizes environmental benefits, it can choose one approach. If a state wants to minimize the costs of compliance, that’s another approach.”

The bottom line: Meeting the Clean Power Plan won’t be too costly and there are a number of ways to meet it. Best of all, it can yield big economic benefits.

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