Wednesday, June 12, 2013

RGGI Reform reflected in June Auction Price

As I discussed here a couple years ago, the Regional Greenhouse Gas Initiative (RGGI) was significantly overallocated.  In its first three-year compliance period (2009-11), the power plants regulated by the program emitted 377 million tons, a mere two-thirds of the total amount allowed under the cap (data generated using the RGGI CO2 Allowance Tracking System).  The oversupply of RGGI allowances resulted in very low allowance prices.  In the quarterly auctions held in 2012, allowances sold at the reserve price of $1.93 per ton, and fewer than two-thirds of available allowances were purchased (data from RGGI’s Market Monitor reports). Similar conditions prevailed at most of the quarterly auctions in 2010 and 2011.  In contrast, in the first auction of 2009, the average bid price was $3.51, and there were offers to buy more than twice the number of allowances available.

Earlier this year, RGGI was reformed to address its overallocation problem.  RGGI released an updated Model Rule that would reduce the 2014 cap from 165 to 91 million tons (the actual 2012 emissions).  As in the original rule, the cap declines by 2.5 percent each year from 2015 to 2020.  The reform was anticipated to increase allowance prices to $4 per ton in 2013 and up to $10 per ton in 2020, and it seems to be working.  In the second quarterly auctions of 2013, held on June 5, allowances sold for $3.21 and all allowances were purchased. 

RGGI deserves a fair bit of credit for reforming the program.  Getting the nine member states to agree to reduce the cap could not have been a simple task politically (though the revenue-raising potential helped, I’m sure).  Yet, it should not be left unsaid that the effectiveness of the program remains in doubt.  Given the changes in the energy sector over the last few years, the program is still not particularly ambitious.  Single-digit allowance prices will not drive an energy sector transition. 

- Lesley McAllister

June 12, 2013 | Permalink | Comments (1) | TrackBack (0)

Tuesday, June 11, 2013

Which Poisoned Places are Near You?

Poisoned Places

Elizabeth Lucas, Center for Public Integrity, and Robert Benincasa, NPR, have analyzed Environmental Protection Agency databases to come up with this highly informative, interactive map of sites that release hazardous pollutants into the air. These sites are "high priority violators" of the Clean Air Act, and have seemingly escaped serious regulatory action to curb their emissions. More from the disturbing report accompanying the map can be read here.

- Blake Hudson

June 11, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, June 10, 2013

N.Y. Times Article re California Beach Fire Rings

Recently the New York Times, echoing some earlier local media coverage, ran an article about an ongoing regulatory initiative from the South Coast Air Quality Management District (SCAQMD) to close open fire pits on public beaches in Southern California because of air pollutant emissions.  The article begins with descriptions and testimonials to the Southern Californian “dream of the beach as a realm of endless, carefree fun,” which despite its rather overwrought tone resonated with me, as I grew up in Southern California going to many of the beaches mentioned in the article.  I was less moved by the article’s intermingled references to “a blizzard of restrictions,” which seemed like a typical overwrought knee-jerk reaction to regulation.

And indeed, toward the end of the article, when it begins to discuss in earnest some of the beach regulations, they turn out to seem quite wise.  Alcohol was banned, for example, after a drunken brawl on a beach.  The proposed removal of the fire rings also seems well justified.  A recent study prepared for the SCAQMD found that one fire pit in one evening may emit as much particulate matter as a heavy-duty diesel truck driving 564 miles—an astonishing statistic.  In an area struggling to address its persistent and severe air pollution problems, leaving fire pit emissions unregulated would seem foolish.  There are very localized effects as well.  A woman who lives two blocks from the beach says that she has to shut her windows in the evenings to avoid asthma attacks.  These are real and serious impacts, and they make the beginning of the article’s references to the loss of ‘fun’ seem comparatively silly—in addition to playing on its beaches, I also grew up choking on Southern California’s smog.  I wonder whether the advocates for ‘fun’ quoted earlier in the article were aware of these facts when they made their statements.  In the end, the article left me more annoyed than anything—not so much at the advocates for ‘fun,’ but at the New York Times for front-loading its article with overwrought elegies to a lost ideal—environmentalists as killjoys—and burying the serious discussion at the end of the article.

--Todd Aagaard

June 10, 2013 | Permalink | TrackBack (0)