Climate change bill could end regional alliance

US plan might supplant one in Northeast

ENERGY-SAVING SHIFT Representative Edward Markey said the state should receive ample federal funds to replace lost revenue. ENERGY-SAVING SHIFT
Representative Edward Markey said the state should receive ample federal funds to replace lost revenue.
By Susan Milligan
Globe Staff / May 14, 2009
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WASHINGTON - A landmark alliance that Massachusetts helped form is slated for elimination under a climate change bill being written in Congress, possibly depriving the Bay State of as much as $100 million it now collects from power companies each year to spend on energy efficiency programs.

The congressional measure, which is expected to be formally written next week, would impose historic new limits on pollutants from a wide variety of energy sources, with a goal of reducing carbon dioxide emissions by 17 percent by 2020. The plan would give or sell allowances to industries to emit a certain amount of pollutants, and the proceeds would be used for a variety of programs aimed at cleaner and more efficient energy use.

The federal plan would probably supplant a similar program already underway by the Regional Greenhouse Gas Initiative, which includes Massachusetts and nine other Northeastern states. But since the program would no longer be allowed to auction off allowances - essentially the right to pollute - the member states would also lose the cash they have been collecting from utilities since last year.

Conceptually, it makes more sense to have a common national standard rather than a hodgepodge of rules, said Ian A. Bowles, Massachusetts secretary of the Executive Office of Energy and Environmental Affairs. But "we want to see there's no diminution of effort, no loss of funding for those energy efficiency [programs], as we make the transition," Bowles said in an interview yesterday.

Representative Edward Markey, a Malden Democrat and a lead negotiator on the bill, said he expected Massachusetts to receive ample federal funds to replace the revenue lost from the elimination of the RGGI program. Further, he said yesterday, the Bay State economy will benefit tremendously from investments in clean energy, since the state's universities and technology companies are leaders in the field.

"The truth is that Massachusetts will benefit in many ways by becoming the intellectual technological leader of the clean energy economy," said Markey, who also heads the House Select Committee for Energy Independence and Global Warming.

While RGGI has been an innovator in controlling carbon emissions, "the purpose of RGGI wasn't to generate revenues, but to curb global warming pollution," Markey said. "A federal system is going to be more effective in accomplishing that goal than RGGI is."

But officials and environmentalists in the Northeast - while excited at the prospect of a national bill to reduce carbon emissions - still worry that they may lose some financial help to other states whose support is needed to pass the sweeping climate change bill.

"It would be a tremendous shame if this important source of revenue for state efficiency effort were to dry up," said Seth Kaplan, senior attorney at the Conservation Law Foundation in Boston.

The issue highlights the unusual difficulty of approving any kind of national energy legislation. While many bills in Congress can be passed easily if one party is dominant - as the Democrats are now - energy policy is largely regional, with coal-producing states at odds with regions that produce oil or that rely on out-of-state sources of power.

Negotiating a national energy policy demands a high level of compromise, and northeastern environmental officials worry that they will lose some ground as negotiators seek to win support from coal-state lawmakers. While President Obama has said he wants to auction off all of the emissions allowances, some industries might be given some relief under the bill, analysts said. That could result in less money for energy efficiency programs around the country.

Further, some regions might prefer to have the cash from emissions allowances used to control energy prices for ratepayers, a congressional aide familiar with the legislation said.

Northeastern state officials hope that the federal government will see the benefits their initiative has brought, and adopt that approach in the federal law, said Daniel Sosland, executive director of Environment Northeast. But "if the federal system doesn't replicate RGGI, those revenues will dry up," he said.

The $100 million a year - the amount Bowles estimates Massachusetts collects under the existing regional program, which began auctioning allowances last summer - cannot go into general revenues or be used for other state budget priorities. The money is directed explicitly to various energy efficiency programs, such as heating systems replacement in homes and businesses, so losing the cash would not add to the state budget deficit.

But if the national climate change bill becomes law, the fate of those Massachusetts programs is unclear, since there is no guarantee that an equal amount of money will be sent back to the state for energy-saving programs.

Associated Industries of Massachusetts, a business trade organization, joined with environmental groups in a letter to Markey and other House Energy and Commerce Committee members, asking that at least 25 percent of the money the federal government will collect from polluters be directed to energy-saving programs.

"Our fear is that if they take away the RGGI money, the state will go after industry and say, 'We need more money for energy efficiency,' " said Robert Rio, the group's senior vice president.

Representative Edward Markey said the state should receive ample federal funds to replace lost revenue.

Energy-saving shift