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Trading carbon leads to significant emissions reductions in north-east US
An emissions trading programme for the electricity sector in the north-eastern US is responsible for half of the region’s emissions reductions seen since 2009, according to study in the journal Energy Economics. The Duke University-led study estimated that without the trading scheme, emissions in the region would otherwise be 24% higher over the period.
The Regional Greenhouse Gas Initiative (RGGI) is the first market-based emissions reduction scheme in the US, and works by setting a cap on emissions from the north-east’s power sector that is lowered over time. Participants can then buy or sell allowances depending on their success in reducing their emissions.
The Duke study used econometric methods to quantify emissions reductions from the RGGI as well as those due to the recession, other emissions reduction programmes and the effect of lower natural gas prices. It found that the RGGI was the most significant driver of emissions reductions in the region.
‘While the study focused on the north-eastern states and the RGGI programme specifically, the findings suggest that emissions trading could be a cost-effective strategy for states now considering how to comply with the EPA’s [US Environmental Protection Agency’s] recently issued regulations aimed at reducing carbon dioxide emissions from power plants,’ said Brian Murray, Director of the Environmental Economics Program at Duke's Nicholas Institute for Environmental Policy Solutions; and the study’s lead author.
The study’s academics were able to separate emissions reductions related to the RGGI by analysing data on power generation, fuel prices, state policies and emissions from all 48 continental US states form 1990 onwards. Emissions reduction factors in RGGI states could then be distinguished from factors that affected emissions in other states and in other time periods.
While other factors did contribute to a decline in emissions, RGGI was clearly responsible for the largest emissions drop, says the study.
