This summer, electricity bills across the U.S. are poised to climb higher as a consequence of volatile fossil fuel costs and climate change impacts like extreme heat.
Rising natural gas prices, affected by Russia’s invasion of Ukraine, are expected to drive up costs in the U.S., including in places like Pennsylvania and Virginia where a significant number of households and businesses are reliant on natural gas for electricity. On top of this, extreme heat around the country is expected to drive up demand as people work to cool down with more air-conditioning use while heat, storms and other climate change-fueled impacts continue to increase the risk of blackouts.
In short, this summer is showing us the value of moving toward a clean, reliable and resilient power sector. The Regional Greenhouse Gas Initiative (RGGI), a market-based, multi-state climate program throughout the Northeast and mid-Atlantic, has been driving progress on a cleaner power sector for over a decade now. Since the program began in 2008, RGGI states have reduced carbon pollution from power plants by over 50% and increased renewable energy generation by 73%.
But what gets less attention is how RGGI has helped cut electricity costs for families, businesses and communities – and continues to do so. Here are four key facts to know.
1. RGGI has generated a 4-to-1 return on investment since the program began.
Stat source: NRDC
RGGI offers a proven, flexible and cost-effective approach to cutting carbon pollution. The program works by placing an enforceable, declining cap on the amount power plants are allowed to emit. Power plants have to pay for each ton of CO2 they release through “allowances,” creating a market incentive for moving to clean sources like wind, solar and nuclear.
Since RGGI puts a price on carbon pollution via the CO2 allowances, it generates proceeds that each state can invest as it sees fit. States have used these flexible investments to help communities in a variety of ways – from funding flood protection in Virginia to transforming former coal plant sites in New York. Many RGGI states have seen a strong, 4-to-1 return on investment from directing proceeds toward programs for energy efficiency, clean and renewable energy, replacing direct fossil fuel use with electric power, greenhouse gas abatement and direct bill assistance – all of which help accelerate the transition toward a cleaner, more affordable power sector.
These gains are further proven by the fact that the region’s GDP has continued to grow as carbon emissions have fallen.
2. Consumers in RGGI states are on track to save $15 billion on their utility bills.
Stat source: The Investment of RGGI Proceeds in 2020
Since the program began, over 7 million participating households and nearly 300,000 participating businesses have benefitted from RGGI investments. Many RGGI states, including Connecticut, Delaware and Maryland, have directed proceeds toward energy efficiency programs that save consumers money, including energy efficiency measures like upgrading appliances and lighting, weatherizing and insulating buildings, and much more. Some RGGI states, including New Hampshire and New Jersey, have also used proceeds to offer direct bill assistance, returning money to consumers as a rebate on their energy bills. Direct bill assistance can be particularly beneficial for low-income families that spend a larger portion of their income on energy costs.
Over time, these RGGI-funded programs have added up, creating a whopping $15 billion in savings on utility bills.
3. In 2020, every $1 raised through RGGI and investment in energy efficiency and other programs generated $10 in energy bill savings.
Stat source: The Investment of RGGI Proceeds in 2020
The latest report on RGGI proceeds shows that investments from 2020 alone will generate substantial savings for consumers, that is, nearly $2 billion in lifetime energy savings for some 65,000 households and 800 businesses.
Another great sign of recent progress: In 2020, RGGI states derived half of their total electricity generation from clean or renewable sources. Getting more clean energy sources on the grid will help hedge against rollercoaster fossil fuel costs, which are set by the global market. Clean energy sources like wind and solar have zero fuel costs because the wind and sun are free, and clean energy made in the U.S. stays in the U.S. The benefits of clean energy are being demonstrated in Texas right now, where analysts say renewables are not only helping keep the power on during a June heatwave, they are also keeping costs low.
4. Electricity prices in RGGI states have fallen, while prices have increased in the rest of the country.
Trends in electricity prices over the last decade also underscore how RGGI is paying off. Retail electricity prices from 2008 to 2017 have dropped by 5.7% across the region, while the rest of the country experienced an 8.6% increase over the same period.
As a 2019 report from Acadia Center pointed out, “Concerns that climate policy will make states less competitive are directly refuted by RGGI’s experience…”
The strains on our electricity sector this summer make it clear that we need solutions that can curb climate pollution, ramp up homegrown clean energy and lessen our dependence on unpredictable global fossil fuel prices. RGGI has a proven track record of cutting carbon and costs for consumers. State leaders who truly want to protect their constituents’ pocketbooks and health should support this tried-and-true approach.
2 Comments
very clear and good article easy to understand. Thank you
Tax energy production and the cost will go down. Anyone telling you this is lying to you. They are also not cleaning the air that much either. Ask them to explain the true meaning behind “NET NEUTRAL” emissions. It means we will let the gov determine who produces power and the consumers will pay a tax for being such irresponsible people.