Cap-And-Trade Program Touted By EPA Is NOT Driving Down Emissions

Andrew Follett | Energy and Science Reporter

A New England cap-and-trade system supported by the Environmental Protection Agency is not the driver behind falling carbon dioxide emission levels in those states, according to an analysis by the Institute for Energy Research published Tuesday.

Nine New England states are voluntarily participating in the Regional Greenhouse Gas Initiative, with the goal of reducing CO2 emissions from large power plants. The EPA is modeling a federal initiative based in part on the RGGI, and proponents of a federal model are touting the RGGI as evidence it can be successful.

But IER found the caps on CO2 were set dramatically above actual emissions levels for the first years of the RGGI program, artificially reducing the program’s costs during its trial period. Once the amount CO2 emissions begin to approach the caps, compliance costs will increase significantly and electricity prices for families and businesses will sharply rise.

The cap of allowed emissions from regulated power plants was 165 million tons in 2013, but actual CO2 emissions were only 91 million tons.

The gap between the cap and actual emissions is shown in this IER graph:

The RGGI program likely didn’t do much to reduce CO2 emissions either.

Analysis by the New York State Energy Research and Development Authority concluded that the switch from coal to natural gas due to relatively low prices was a primary driver of declining CO2 emissions in New England. The stated goals of RGGI were met due to the market-based transition from coal to natural gas power, not the regulatory system. (RELATED: Fracking, Not Renewables, Is Responsible For Emissions Reduction)

Despite these issues, the EPA consistently points to RGGI as the model of its proposed Clean Power Plan and has used it as an example to support the agency’s cap-and-trade proposals.

Environmentalists like Executive Director of Greenpeace Annie Leonard have called cap-and-trade a “multi-trillion dollar carbon racket” which creates “real incentives to cheat” and is a “dangerous distraction.” Even environmentalists who agree with the idea of cap-and-trade admit that RGGI  “falls short of creating real price pressures due to its closeness to baseline emissions.”

Previous attempts by Europe to create a cap-and-trade system actually caused CO2 emissions to increase due to scams and corruption.

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