On April 6, Maryland Gov. Robert Ehrlich (R) signed into law the “Healthy Air Act,” a bill aimed at reducing air pollution from coal-fired power plants. It requires the state to join a Regional Greenhouse Gas Initiative (RGGI) made up of seven other Northeastern states.
While Ehrlich largely supported the bill’s provisions to reduce emissions of sulfur dioxide, nitrogen oxides, and mercury–cuts similar to ones his administration had proposed in the fall of 2005–he opposed provisions requiring cuts in carbon dioxide (CO2) emissions, and he had previously withdrawn the state from the RGGI before it went into effect. But because the bill passed by a veto-proof majority of the Democrat-controlled legislature, the governor decided to sign it.
Following on the 2001 Climate Change Action Plan developed by New England governors and the premiers of eastern Canadian provinces, in April 2003 New York Gov. George Pataki (R) invited governors from northeastern and mid-Atlantic states and eastern Canada provincial governments to participate in discussions to develop and enact a region-wide plan–the RGGI–to reduce CO2 emissions from power plants through a cap-and-trade approach. Of the 10 states that participated in drafting the RGGI, seven–Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont–joined the finalized agreement with a Memorandum of Understanding signed on December 20, 2005.
The governors of Maryland, Massachusetts, and Rhode Island rejected the plan as being too costly for their states’ economies while delivering negligible environmental benefits. With the Maryland legislature’s action, the state has been forced back into the RGGI.
Under the regional initiative, the participating states have set a goal of stabilizing emissions from power plants at present levels through 2014. From 2015 through 2018, emissions must be cut by 10 percent below present levels. The program is scheduled to go into effect in 2009.
According to the RGGI Web site, under the cap-and-trade program each state establishes the total amount of emissions to be allowed from power plants. Then the state distributes allowances for each ton of emissions, up to the amount of the cap, to the affected parties. Every covered source must either stick within its emissions allowance or buy allowances from covered sources who met their emission requirements with allowances to spare.
Pushing the Healthy Air Act was a coalition of national, regional, and local environmental groups, including the Chesapeake Climate Action Network (CCAN) and Maryland Public Interest Research Group, who cheered the act’s passage. Mike Tidwell, director of CCAN, stated, “Maryland leaders took a historic step today in acknowledging the crisis of global warming and deciding to do something about it,” according to an April 4 report by the Environment News Service.
Other analysts view the Maryland legislature’s actions as more hysteric than historic, warning that Maryland’s citizens may come to regret the day the law was passed. Myron Ebell, director of energy and global warming policy at the Competitive Enterprise Institute, said, “It’s a move towards energy rationing and higher energy prices at a time when the rest of the world is increasingly acknowledging that Kyoto-type restrictions won’t work.
“If the emissions trading system turns out to be anything like Europe’s, workers and consumers in Maryland can look forward to rising unemployment rates and higher energy prices,” which in turn raise the price of most everything else, Ebell added. “Europeans were sold a bag of goods by the bureaucrats who designed their trading system. Now manufacturers are increasingly unable to afford energy, and that’s costing jobs.”
Dan Simmons, director of the American Legislative Exchange Council’s (ALEC) natural resources task force, agreed. “Carbon dioxide, the inescapable by-product of burning fossil fuels, is beneficial to plant and human life alike,” Simmons said. “The effort to regulate it as a greenhouse gas will undermine energy diversity. It is just another highly regressive energy tax. It will harm working families in the states where it is imposed, while doing nothing to benefit environmental or human health.”
All Pain, Little Gain
Because the program is new, thorough economic analyses of it have yet to be completed. However, a July 2004 economic analysis of the earlier regional Climate Change Action Plan projected the costs as substantial. According to the analysis, published by ALEC, both electricity and residential natural gas prices would rise by as much as 39 percent by 2020.
Those price increases would have a profound impact on individual disposable income, economic activity, and employment, according to the report. By 2010, the report found, in northeastern states under the CCAP, consumption spending would fall by an estimated average of $2,634 per household, gross state product would decline 1.1 percent, and 191,589 jobs would be lost.
In exchange for such high costs, the environmental benefits would be minimal. According to the National Center for Atmospheric Research, even if all of the signatories to the more stringent international Kyoto Protocol met their greenhouse gas reduction targets, the Earth would be only .07 to 0.19 degrees Celsius cooler than it would be without Kyoto.
The temperature reduction from the RGGI, encompassing far fewer emission sources than Kyoto, would amount to only a fraction of Kyoto’s very minor temperature reduction.
H. Sterling Burnett, Ph.D. ([email protected]) is a senior fellow at the National Center for Policy Analysis.
For more information …
“State Greenhouse Gas Programs: An Economic and Scientific Analysis,” Heartland Policy Study No. 101, February 2003, http://www.heartland.org/Article.cfm?artId=11559.
“Unintended Consequences: Northeastern State Proposals to Limit Greenhouse Gas Emissions,” Paul M. Bernstein, W. David Montgomery, Sugandha Tuladhar, and Charles River Associates, American Legislative Exchange Council State Factor, July 2004, http://www.accf.org/pdf/NEGreenhouseGas.pdf.
“Sons of Kyoto: Greenhouse Gas Regulation in the States,” Alexandra Liddy Bourne, American Legislative Exchange Council, http://www.heartland.org/Article.cfm?artId=14415.
“Global Warming and the Kyoto Protocol: Paper Tiger, Economic Dragon,” Patrick Michaels; American Legislative Exchange Council State Factor, 2002, http://www.alec.org/meSWFiles/pdf/0208.pdf