The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States
BY Analysis Group | November 2011
While prior analyses were based on projections of RGGI performance, this report provides the first comprehensive analysis of actual RGGI performance based on real data. It found that RGGI generates greater economic growth in every one of the 10 RGGI states than would occur without a carbon price. Given that the purpose of RGGI is to reduce carbon, not generate economic growth, this analysis received widespread media coverage and had a dramatic impact on public understanding of the trading system, not just among RGGI stakeholders and policymakers, but also in states weighing the risks and benefits of a price on carbon.
$1.6 billion in growth
$912 million in allowance proceeds
$1.3 billion in energy savings to consumers
Power plant owners lose $1.6 billion in revenue
$765 million kept in local economy
16,000 net jobs created
RGGI is a functioning commodity market. On average, carbon pricing in the electricity market helped residential customers in RGGI states save $25 on their electric bills, commercial customers $181 and industrial customers $2,493 each.
Member states effectively exercise their rights, with the freedom to invest the auction proceeds in whatever way the state determined served their best interests.
Choices made about spending the auction proceeds affect the shape and size of the economic benefit. Efficiency spending delivers greatest economic boost through several avenues: jobs created to audit and install efficiency measures; revenues for retail stores selling product; consumer savings spent on local goods and services. The faster the revenues are spent, the faster the economic benefits are realized.Source of electricity affects level of economic benefits: The greater a state’s reliance on fossil fuels, and the dirtier the fuel, the lesser their economic benefits.