How Cap-and-trade Pays

State Officials Say Program To Limit Emissions Of Greenhouse Gases Is A Model For U.s.

December 16, 2009|By Timothy B. Wheeler | Timothy B. Wheeler,

In a little more than a year, a regional push to cap greenhouse gases has raised millions for Maryland energy programs, with supporters calling it a model for easing climate change on a national or even global scale.

Since September 2008, Maryland and nine other Northeastern and Mid-Atlantic states have been participating in the Regional Greenhouse Gas Initiative. In its "cap and trade" regulatory scheme, emissions of carbon dioxide from power plants have been capped and plant operators are required to buy permits for all the gas that their facilities release into the atmosphere.

Similar programs, in which businesses buy and sell the rights to release greenhouse gases, are being considered for extension nationwide under legislation in Congress that passed the House last summer and is pending in the Senate. It's also on the table for international action at rancorous United Nations climate talks scheduled to conclude Friday in Copenhagen.

"While Washington and the world debate this in Copenhagen, we've already exercised leadership and proved that cap-and-trade can work, said Malcolm Woolf, director of the Maryland Energy Administration, "and we are investing the proceeds in helping families and businesses."

Some business groups and conservative critics have warned that cap-and-trade regulation of greenhouse gases could cripple the U.S. economy, driving energy prices through the roof and putting millions out of work. Some economists and environmentalists also oppose the approach, arguing that it's too complicated and fraught with loopholes to make a real dent in emissions that threaten to drastically alter the world's climate.

But power companies in Maryland and the nine other states have been paying for the rights to emit greenhouse gases for more than a year with slight impact on consumers' electric bills. Baltimore Gas and Electric Co.'s residential customers are paying perhaps $1.25 a month more as the costs of the carbon-dioxide permits are passed through, said Constellation Energy spokesman John Quinn. That represents about 1 percent of the average household's electric bill.

Meanwhile, the state has collected more than $96 million in revenue from the six carbon-dioxide auctions held since September 2008, with the funds earmarked for providing relief from energy costs and ultimately reducing greenhouse gas emissions.

Specifically, half the funds this year go to help poor families pay their power bills, while nearly a quarter goes to provide a bit of rate relief for all residential utility customers - about 43 cents on the typical household power bill this winter, according to Quinn.

Another 18 percent goes into promoting energy efficiency and conservation, with an additional 6 percent earmarked to provide grants and low-interest loans for homes and businesses to install "clean" energy systems.

Frank and Lois Bohdal are among more than 600 Marylanders this year who have received state grants funded in part with carbon-auction proceeds to help them put in home solar, wind or geothermal energy systems.

Bohdal, a computer programmer with the state comptroller's office, has blanketed the south-facing roof of the couple's Millersville rancher with 40 solar panels. They cost a total of $55,000 - but the state helped cover their installation with nearly $14,000 in grants. And the electricity they generate has reduced the couple's power bill by nearly a third.

"So far, it's been worthwhile to me," said Bohdal, who notes that he was able to cover about half the upfront costs with federal and local tax credits.

Some of the carbon-auction funds also are going into retrofitting low-income apartment complexes with better insulation and energy-efficient appliances and lighting. The state recently awarded grants to fix up the 158-unit Sierra Woods apartments in Columbia and another complex in Montgomery County. Using the auction proceeds and federal stimulus funds, the state hopes to work on nearly 1,600 apartments this year.

"We do believe that in the long haul it will help make these properties and the rents more sustainable for our residents," said Pat Silvester of the state Department of Housing and Community Development, which is overseeing the projects.

The regional effort in the East has inspired similar collaborations of states in the Midwest and the West, and supporters believe it helped build support on Capitol Hill for the cap-and-trade plan to curb greenhouse gases that is written into the bill that passed the House in June. A similar approach is being considered in the Senate.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.