| August 4, 2009 |  |
Senate Finance Committee Should Use Cap and Trade Revenues to Boost Renewable Energy and Energy Efficiency, Science Group Says
Northeast Climate Program Provides Good Model
The Senate Finance Committee holds a hearing today on the details of a cap-and-trade program in proposed energy and climate legislation. Two big questions they will address are: how to best distribute allowances—or permits—for polluters to emit carbon dioxide and other pollutants that cause global warming, and how to best spend revenue from the portion of allowances that are auctioned.
The hearing starts at 10 a.m. in 215 Dirksen Senate Office Building.
Lawmakers need look no further than the Northeast for some viable answers. In January, 10 states in the region established the country's first cap-and-trade program, the Regional Greenhouse Gas Initiative (RGGI). So far the states have held four allowance auctions, raising more than $360 million, and are investing the bulk of that revenue in energy efficiency programs and renewable power.
"The Northeast program provides a great model for a national cap-and-trade system," said Kevin Knobloch, president of the Union of Concerned Scientists. "The first four RGGI auctions yielded more than $360 million, which the states are investing in energy efficiency programs and renewable energy. The efficiency programs will cut energy demand, which in turn will reduce consumer electric bills. Increasing the region's reliance on renewables likewise will cut energy bills by reducing demand for fossil fuels. And, best of all, more efficiency and renewables means less global warming pollution."
Specifically, the RGGI states are using auction revenue to replace heating systems in low-income households, provide no-interest and low-interest loans for nonprofits and businesses to make their buildings more energy efficient, and offer technical information and volunteer support to help homeowners install solar hot water systems and weatherize their homes.
Before the Northeast states established RGGI they commissioned studies on how auction revenue could best be used. An analysis by economists at the University of New Hampshire found that distributing auction revenue directly to households and businesses would not help the region's economy. They found that devoting 100 percent of the revenue to investments in energy efficiency, however, would generate new jobs and reduce electric bills for all ratepayers.
The states also reviewed energy efficiency programs run by utilities, government agencies and nonprofit organizations and concluded that every dollar invested in energy efficiency cut consumer and business electric bills $2 to $3.
McKinsey & Company recently conducted a study that looked at how the nation would benefit by investing in energy efficiency. The consulting firm found that investing $50 billion for 10 years would reduce U.S. energy use in buildings and industry by 23 percent in 2020 -- more than Canada's annual non-transportation energy consumption—while lowering consumer and business energy costs by $1.2 trillion and cutting annual U.S. global warming emissions by 1.1 gigatons.
The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with citizens across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.
