Dover Governor Ruth Ann Minner today signed Senate Bill 263, authorizing Delaware to participate in the Regional Greenhouse Gas Initiative (RGGI), a market-based program to reduce greenhouse gas emissions from fossil fuel-fired power plants that includes nine other mid-Atlantic and northeastern states.
The legislation, sponsored by Senator Harris McDowell and Representative Pam Thornburg, establishes the framework for Delaware’s program and authorizes the Department of Natural Resources and Environmental Control to adopt regulations to fully implement the law. The 10-state initiative begins January 1, 2009.
“As a coastal state, we are at great risk from the effects of climate change and rising sea levels,” Gov. Minner said. “Many other states are learning from the RGGI model, and I am pleased that Delaware can now be a part of this historic program to begin to seriously address the challenges presented by greenhouse gas emissions and their impacts.”
Gov. Minner brought Delaware into the program in 2003 and was one of seven governors that signed a Memorandum of Agreement in 2005 that established RGGI. The program now encompasses 10 states and includes Maryland, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, New Hampshire, Vermont and Maine.
Under the program, fossil fuel power plants must purchase credits equal to the amount of carbon dioxide emissions they produce. One credit is equivalent to one ton of carbon dioxide. Each participating state will receive an allocation of credits based on an average of emissions from regulated power plants (25 megawatts or larger). RGGI states will hold regular auctions allowing power plant operators to purchase credits needed. Fossil fuel-fired power plants are among the largest sources of greenhouse gas emissions.
The legislation is a product of a work group established last year by Senate Concurrent Resolution 28. A majority of the work group members favored an approach that would require power plants to purchase 60 percent of the credits needed for the first year, increasing by 8 percent annually, so in the fifth year of the program, power plants would be required to purchase 100 percent of the credits they need.
“This approach is a measured entry into the RGGI program and provides an economic buffer for electric consumers in Delaware in the event of credit price volatility in the market while still meeting the environmental goals of RGGI,” said Sen. McDowell.
The legislation also apportions the revenues that accrue to the state from the sale of the credits with 65 percent directed to the state’s Sustainable Energy Utility and 15 percent to low income consumers through the Weatherization Assistance and Low Income Heating Assistance programs. Additionally, 10 percent of the funds will be directed to greenhouse gas reduction projects through a competitive grant process and up to 10 percent may be used by the Department of Natural Resources and Environmental Control to administer the program and other climate change initiatives. Revenues will depend on the price per credit, but assuming each credit sells for about $2, first-year revenues could be approximately $7 million.
“Providing financial support for the state’s new Sustainable Energy Utility presents a wonderful opportunity for Delawareans to participate in a program to save money through energy conservation while reducing environmental impacts,” said Rep. Thornburg.
RGGI is modeled after other cap-and-trade approaches that have been used historically to reduce emissions of nitrogen oxides and sulfur dioxides through a market-based approach designed to seek the lowest cost solution to reduce emissions. While pollution control technologies have been developed to control other forms of air emissions, no such technology exists to control carbon dioxide. RGGI places a cap on current emissions with a goal of a 10 percent reduction by 2019.
“Delaware, along with the other RGGI states, is again leading the nation through an innovative and pragmatic approach to environmental problem solving,” said DNREC Secretary John A. Hughes.