Chesapeake PSR

RGGI and EmPOWER benefit Maryland's economy and health

Climate Change and EnergyLydia SullivanComment

by Sara Via, PhD

The Regional Greenhouse Gas Initiative (RGGI) and EmPOWER, Maryland’s energy efficiency program, are two of Maryland’s most effective programs for reducing air pollution and addressing climate change.1 Strengthening these proven programs is essential if Maryland is to reduce CO2 emissions in 2030 by 40 percent, as mandated by the Greenhouse Gas Reduction Act (GGRA) of April 2016. Meeting the 2030 goal will put Maryland on a trajectory to the 90 percent reduction in greenhouse gases by 2050 that scientists now deem essential to limit global temperature increase to 2O C. The 2030 goal was unanimously approved in November 2015 by the Maryland Commission on Climate Change and approved by the Maryland General Assembly in the 2016 session in the GGRA renewal. Although Governor Larry Hogan was widely praised for his bipartisan spirit in signing the GGRA legislation, the Hogan administration is now wavering in its support of both RGGI and EmPOWER. This compromises Maryland’s progress toward the crucial emissions goals.

RGGI and EmPOWER are proven programs. RGGI is a regional market-based program for reducing emissions from power plants. In the nine RGGI states, power companies must purchase an “allowance” for each ton of CO2 emitted, rewarding companies that produce power most efficiently. Each year, there is a “cap” on the amount of CO2 that can be released. When the cap declines, so does the allowable amount of air pollution. EmPOWER Maryland is the program that coordinates and funds residential and commercial energy efficiency. Energy efficiency is the cheapest and healthiest way to satisfy our future need for power.2 Last year, the Maryland Public Service Commission (PSC) mandated that Maryland’s utilities must develop programs to reduce electricity demand by two percent each year, establishing Maryland as a national leader in energy efficiency. By reducing the need for dirty power, EmPOWER saves Marylanders money and improves health. These two programs are good for Maryland:

RGGI and EmPOWER clean the air and improve health. Since the inception of RGGI, carbon pollution in the region has declined by 30-37 percent.3 This not only reduces rate of climate change, but has large and immediate positive impacts on health. In Maryland, with an asthma rate twice the nation’s average, air pollution sends tens of thousands to hospitals and causes hundreds of premature deaths each year. Through annual reductions of the allowable cap on air pollution, RGGI is improving health and saving lives—an estimated $6 billion value for Maryland since 2008.4 Over the past eight years, EmPOWER has reduced peak demand (the exceptional call for power on extremely hot days) by 15 percent, and has cut overall demand by seven percent.1 Shaving the peak is particularly important because power companies increase the use of the dirtiest power plants to meet these brief periods of high demand for power. The PSC order to reduce demand by two percent per year will go a long way toward cleaning Maryland’s air, because if we don’t use the power, we escape the air pollution that comes from generating it.

RGGI and EmPOWER benefit Maryland’s economy. The funds raised from selling allowances are returned to the states and used for the benefit of consumers and to support energy efficiency and renewable energy. By reducing reliance on dirty power, these investments multiply RGGI’s impact on climate pollution. As of fall 2016, Maryland has received $533 million from RGGI. Spending the RGGI funds on energy efficiency and renewables provides a big boost to local economies, a benefit estimated at $200 million for Maryland between 2011 and 2014.5 Energy efficiency and renewables also create good-paying jobs that can’t be outsourced. Since 2008, RGGI has produced over 30,000 job-years across the nine states, and more jobs have been created through support of energy efficiency under EmPOWER.

RGGI and EmPOWER benefit Maryland’s residents. To date, RGGI has saved Maryland residents over $450 million in energy bills, with more to come, as energy efficiency upgrades keep paying off year after year. In addition, reduced air pollution means better health, and investments by RGGI and EmPOWER in weatherizing homes also pays large dividends in increased health, particularly of low-income residents. Marylanders want these programs—a recent poll organized by Sierra Club revealed that 79 percent Marylanders support RGGI and want it strengthened.

RGGI and EmPOWER at a crossroads. In 2020, the annual reductions in the pollution cap under RGGI are scheduled to stop, and the RGGI states are now reviewing the program to determine what happens then. Analyses show that we need a five percent annual cap reduction,6 to meet the climate goals accepted by all nine RGGI states—35-40 percent reduction in carbon pollution by 2030, and 80-90 percent reduction by 2050.7 However, in Maryland, the power company NRG Energy has lobbied hard to resist the cap reductions, fearing that this will raise the price of allowances and drive purchases of power from adjacent non-RGGI states. Despite RGGI’s proven economic and health benefits to the state and its residents, the Hogan administration appears to be swayed by the power company’s arguments. Currently, Maryland is not supporting the five percent cap reduction and appears to be trying to encourage other RGGI states to support a weaker 2.5-3.5 percent annual reduction in allowable carbon pollution.

The support of the Hogan administration for EmPOWER is also wavering. As announced by the Maryland Department of Energy earlier this year, there will be no expansion of EmPOWER’s budget. EmPOWER is funded through a $0.00578/kWh surcharge on power bills (about $5 for an average customer using 1000kWh/month). Governor Hogan resisted an increase in the surcharge even though the reduced use of power through energy efficiency will lead to lower monthly bills, particularly for customers who take advantage of EmPOWER’s many programs. For example, BGE’s PeakRewards program8 pays residential customers $25 a month for the ability to turn off their air conditioners for a few hours during 1-5 very hot afternoons each summer, and $6.25/month for the same periodic control of residential water heaters in the winter months. A customer with a single heat pump nets $100 from the air conditioner control and $25 from the hot water control each year, for a total that is nearly twice the $60 per year average surcharge. Residents who take advantage of the free Quick Energy Audit offered through their utility will receive about $60 in free energy efficiency supplies, while those who obtain a full energy audit for $100 (reduced by EmPOWER from $400) will receive a detailed report with suggestions that will reduce their overall energy use by up to 25 percent through upgrades subsidized by EmPOWER rebates.

Because of changes in the composition of the PSC under Governor Hogan, environmentalists and health advocates fear that the two percent reduction mandated in 2015 may be in jeopardy. This would continue the impacts of dirty power on health and cost Maryland’s businesses and residents billions over the next few years for power they could have saved.

What's at stake? Will Maryland meet that crucial 2030 goal for reducing emissions or not? Scientists say that we need to eliminate 90 percent of all carbon emissions by 2050 to keep climate change impacts to levels that are even roughly manageable.9 If we start to fall behind in 2020 because RGGI and EmPOWER have been weakened, it will be very hard or impossible to catch up.

What can you do? Call Governor Hogan’s office and urge him to

  • Support a strong RGGI with a five percent annual cap reduction from 2020-2030, and
  • Support EmPOWER Maryland and maintain the PSC’s mandated two percent annual demand reduction.

In your conversation, you can mention the economic and health benefits of these two programs—proven job creation, reductions in electric bills and cleaner air for all Maryland residents. Also, stress that you want Maryland to reach the 2030 goals for reducing carbon pollution, which means acting NOW.

During this holiday season, supporting policies that clean Maryland’s air is probably the best gift that you can give your kids and grandkids.

Listen to Dr. Via discuss these issues on WYPR's On The Record with Sheilah Kast (12/13/2016).

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1 Maryland Department of the Environment. 2015 The Greenhouse Gas Reduction Act Update. Available at: http://www.mde.maryland.gov/programs/marylander/documents/mccc/publications/2015ggraplanupdate/climateupdate2015.pdf

2 American Council for an Energy Efficient Economy. 2016. The greatest energy story you haven’t heard: How investing in energy efficiency changed the US power sector and gave us a tool to tackle climate change. Available at: http://aceee.org/research-report/u1604

3 Morris, Jackson. 2016. NRDC blog, available at: https://www.nrdc.org/experts/jackson-morris/rggi-states-poised-triple-down-climate-progress.

4 Acadia Center. 2016. Regional Greenhouse Gas Initiative Status Report. I. Measuring success. Available at: http://acadiacenter.org/document/measuring-rggi-success Acadia Center. 2016. Appendix to: Synapse Energy Economics. 2016. RGGI: A model program for the energy sector. www.synapse-energy.com/sites/default/files/RGGI_Opportunity_2.0.pdf

5 The Analysis Group. 2015. The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States. Available at: http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/analysis_group_rggi_report_july_2015.pdf

6 Synapse Energy Economics. 2016. RGGI: A model program for the energy sector. www.synapse-energy.com/sites/default/files/RGGI_Opportunity_2.0.pdf

7 Acadia Center. 2016. Regional Greenhouse Gas Initiative Status Report. I. Measuring success. Available at: http://acadiacenter.org/document/rggi-achieving-climate-commitments/

8 Baltimore Gas and Electric. Peak Rewards Program. Described at: http://bgesavings.com/

9 National Research Council. 2011. Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia. Washington, DC: National Academies Press. Available at: https://www.nap.edu/download/12877

Dr. Sara Via is Professor of Biology and Entomology at the University of Maryland, College Park. She is co-lead on Chesapeake PSR's Climate Health Action Team.