Emissions from Northeast power plants decline

By Beth Daley, Globe Staff

New figures being released Wednesday show the recession helped drive down global warming emissions from Northeast power plants last year to their lowest levels in at least nine years.

But the decline could have the perverse effect of delaying more lasting reductions under a landmark 10-state pact to fight man-made climate change.

Northeast emissions last year dropped about 9 percent from 2007, according to preliminary projections by Point Carbon, a consulting and research firm. The Norway-based company said the recession, combined with power plants burning cleaner natural gas, appear to be the main reasons.

The drop in emissions is good for the environment in the short term. But oddly, it has the unintended effect of delaying the more important, longer-term impact of a program to reduce greenhouse gases. That program, designed by 10 Northeast states and called the Regional Greenhouse Gas Initiative, or ReGGI, is a model for national legislation being drafted in Washington.

The initiative sets a cap on carbon emissions that is designed to decrease over time. The arrangement, called a "cap and trade" plan, works like this: Power plants obtain emission allowances from states for every ton of carbon dioxide they emit, with plants that emit larger amounts having to obtain more allowances than cleaner ones.

As the cap is lowered, there are fewer available allowances, pushing the price up and thus encouraging the dirtiest power plants to instead invest in cleaner technologies. Over time, cleaner power plants will then outcompete dirtier ones.

But with emissions now about 17 percent below the ReGGI cap, allowances are not in particular demand, so the market forces are not kicking in. Emission allowances are not expected to get high enough anytime soon to spark investment in clean energy.

“(ReGGI) was designed to lower emissions below business as usual, but business as usual has changed,’’ said Alden Meyer, director of strategy and policy for the Union of Concerned Scientists, a Cambridge-based research and advocacy group. “The lesson is you have to have a system you can adjust as circumstances change. The urgency of the science shows ... we need to be ambitious.”

That lesson is an important one for the Obama administration as it crafts its own "cap and trade" legislation designed to reduce the nation's greenhouse gas emissions. If the cap is set too high, little happens.

But even with that shortcoming, the architects of ReGGI win praise for developing the only existing mandatory cap and trade carbon market in the US. ReGGI states' officials also get credit for standing strong against political pressure to give away emission allowances for free. As a result, the program has already raised over $145 million from auctioning emission allowances, according to Worcester-based World Energy, which runs the auction.

Another auction is scheduled for next week. In Massachusetts, much of its $28 million share is going into energy efficiency.

“ReGGI is path-breaking,’’ said Robert Stavins, director of Harvard University's environmental economics program and an expert on cap and trade programs. He said it showed "you can have an auction and it can work."

Still, Stavins says ReGGI is narrow in scope, and any national cap and trade program should regulate emissions at major "upstream" sources of emissions, such as at coal mines to minimize the number of entities that have to be subject to regulation.

President Barack Obama's budget plan assumes there will be about $79 billion in revenue in 2012 from the sale of greenhouse gas permits under a cap and trade program. Both Senate Majority Leader Harry Reid of Nevada and House Speaker Nancy Pelosi of California have said they want to pass climate change legislation this year.

Today, the Environmental Protection Agency proposed establishing a national system for reporting greenhouse gas emissions that could serve as a baseline for a national cap and trade program. Meanwhile, US Representative Edward J. Markey of Malden, who chairs key energy and global warming panels, is writing a global warming and energy bill that includes emissions trading.

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