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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Operators of dozens of fossil-fueled power plants in New Jersey and Virginia may have to sharpen their pencils and recalculate their operating costs, as those states plan to combat climate change by joining, or aligning with, the Regional Greenhouse Gas Initiative Incorporated (RGGI) (New York, New York), a mandatory cap & trade organization for fossil-fueled power plants located in nine Northeastern and Mid-Atlantic states.
New Jersey was part of RGGI when it formed about a decade ago, but then-Governor Chris Christie pulled out of the group a few years after it joined. The Garden State's new governor, Phil Murphy, who took office January 16, reaffirmed his commitment to have New Jersey rejoin RGGI. Earlier this month, Virginia's State Air Pollution Control Board opened a 90-day public comment period on a proposed rule to lower carbon dioxide (CO2) emissions from fossil-fueled power plants. That draft rule broadly aligns with RGGI's goals, and Virginia's plan appears to be to either join RGGI or adopt CO2-reduction rules that can be linked to RGGI's.
"We've had collaborative and productive discussions with Virginia," which wants to link to RGGI, Ben Grumbles, RGGI's chair, said in a January 11 webcast. "For New Jersey, preliminary discussions [about rejoining RGGI] have begun, but the formal process is not yet under way, though we look forward to an in-depth dialog in the near future." Grumbles, who is secretary of Maryland's Department of the Environment, made his remarks a few days before New Jersey Governor Murphy took office.
Last year, RGGI's nine member-states adopted a goal of lowering CO2 emissions by 30% between 2020 and 2030. The nine states have a total of 166 fossil-fueled power sources that are larger than 25 megawatts (MW) that are bound by the group's emissions decisions. For more on that decision, see October 19, 2017, article - Lower CO2 Emissions Cap May Mean Higher Allowance Prices for Fossil-Fueled Plants in Northeast, Mid-Atlantic States.
CO2 emissions have dropped significantly in the RGGI states over the years. In 2012, emissions were capped at 165 million short tons, RGGI data shows. By 2020, emissions are slated to fall to about 75 million short tons; by 2030, emissions are scheduled to reach about 53 million short tons. If each target is met, CO2 emissions from power plants in the nine-state area would fall by about 112 million short tons, or about 68%, between 2012 and 2030.
According to Industrial Info's Global Market Intelligence (GMI) Integrated Platform, New Jersey has 38 operating fossil-fueled power plants larger than 25 MW, and construction of one additional project is planned. Virginia has 40 operating fossil-fueled power plants larger than 25 MW and four more are on the drawing board.
The RGGI is the first mandatory, market-based, cap-and-trade regulatory program in the U.S. to reduce greenhouse gas emissions. Fossil-fueled power plants operating in a state that is part of RGGI are required to hold one CO2 allowance for each ton of CO2 emitted over a three-year period. The RGGI board of directors comprises regulatory officials from Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.
Each quarter since September 2008, the RGGI has auctioned CO2 allowances, which are created by the participating states. Unlike other allowance markets, companies do not have the option of over-controlling emissions and selling excess allowances. In its most recent auction, conducted last December, CO2 allowances had a clearing price of $3.80 each. Roughly 15 million allowances were auctioned then. RGGI said the December auction generated $55.8 million that the nine states will be able to invest in efforts to decarbonize their electricity supply and potentially lower electricity use, including energy efficiency programs, renewable energy, direct bill assistance and greenhouse gas (GHG) abatement programs. More than $2.8 billion has been raised by RGGI in its 38 CO2 auctions since 2008.
Click on the image at right for a graph detailing the RGGI's CO2 allowance auctions.
"Several of the RGGI states operate in competitive markets, where power auctions typically are very competitive," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "Nuclear units, for example, often fail to clear these auctions because those units have higher operating costs compared to other types of generation. Anything that pushes up the cost to operate will disadvantage fossil-fueled power plant owners in competitive markets."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
New Jersey was part of RGGI when it formed about a decade ago, but then-Governor Chris Christie pulled out of the group a few years after it joined. The Garden State's new governor, Phil Murphy, who took office January 16, reaffirmed his commitment to have New Jersey rejoin RGGI. Earlier this month, Virginia's State Air Pollution Control Board opened a 90-day public comment period on a proposed rule to lower carbon dioxide (CO2) emissions from fossil-fueled power plants. That draft rule broadly aligns with RGGI's goals, and Virginia's plan appears to be to either join RGGI or adopt CO2-reduction rules that can be linked to RGGI's.
"We've had collaborative and productive discussions with Virginia," which wants to link to RGGI, Ben Grumbles, RGGI's chair, said in a January 11 webcast. "For New Jersey, preliminary discussions [about rejoining RGGI] have begun, but the formal process is not yet under way, though we look forward to an in-depth dialog in the near future." Grumbles, who is secretary of Maryland's Department of the Environment, made his remarks a few days before New Jersey Governor Murphy took office.
Last year, RGGI's nine member-states adopted a goal of lowering CO2 emissions by 30% between 2020 and 2030. The nine states have a total of 166 fossil-fueled power sources that are larger than 25 megawatts (MW) that are bound by the group's emissions decisions. For more on that decision, see October 19, 2017, article - Lower CO2 Emissions Cap May Mean Higher Allowance Prices for Fossil-Fueled Plants in Northeast, Mid-Atlantic States.
CO2 emissions have dropped significantly in the RGGI states over the years. In 2012, emissions were capped at 165 million short tons, RGGI data shows. By 2020, emissions are slated to fall to about 75 million short tons; by 2030, emissions are scheduled to reach about 53 million short tons. If each target is met, CO2 emissions from power plants in the nine-state area would fall by about 112 million short tons, or about 68%, between 2012 and 2030.
According to Industrial Info's Global Market Intelligence (GMI) Integrated Platform, New Jersey has 38 operating fossil-fueled power plants larger than 25 MW, and construction of one additional project is planned. Virginia has 40 operating fossil-fueled power plants larger than 25 MW and four more are on the drawing board.
The RGGI is the first mandatory, market-based, cap-and-trade regulatory program in the U.S. to reduce greenhouse gas emissions. Fossil-fueled power plants operating in a state that is part of RGGI are required to hold one CO2 allowance for each ton of CO2 emitted over a three-year period. The RGGI board of directors comprises regulatory officials from Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.
Each quarter since September 2008, the RGGI has auctioned CO2 allowances, which are created by the participating states. Unlike other allowance markets, companies do not have the option of over-controlling emissions and selling excess allowances. In its most recent auction, conducted last December, CO2 allowances had a clearing price of $3.80 each. Roughly 15 million allowances were auctioned then. RGGI said the December auction generated $55.8 million that the nine states will be able to invest in efforts to decarbonize their electricity supply and potentially lower electricity use, including energy efficiency programs, renewable energy, direct bill assistance and greenhouse gas (GHG) abatement programs. More than $2.8 billion has been raised by RGGI in its 38 CO2 auctions since 2008.
"Several of the RGGI states operate in competitive markets, where power auctions typically are very competitive," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "Nuclear units, for example, often fail to clear these auctions because those units have higher operating costs compared to other types of generation. Anything that pushes up the cost to operate will disadvantage fossil-fueled power plant owners in competitive markets."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
