In the aftermath of the storm called Sandy, there have been weekly calls for the federal government and for states to address how our country might adapt in response to a changing climate. A recent Government Accounting Office report, a petition to FEMA with which CLF has been involved, and the launch of a new Northeast regional web-based climate resource, all illustrate different aspects of this challenge.

Every year, the GAO provides an update to Congress as part of its “High Risk” series, detailing areas of government fiscal exposure and recommending actions to mitigate those. In this year’s report, GAO has added a new area of concern: “Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks.” The major finding? “The federal government is not well organized to address the fiscal exposure presented by climate change,” even though a National Research Council paper in 2010 concluded that “increasing the nation’s ability to respond to a changing climate can be viewed as an insurance policy against climate risk.” The conclusion? “The federal government needs a strategic approach with strong leadership and the authority to manage climate change risks….” Unfortunately, in areas such as federal flood and crop insurance, technical assistance to state the local governments, and disaster aid, there has been little progress to date.

This is illustrated by a petition filed in October by the Natural Resources Defense Council and National Wildlife Federation that calls on FEMA to abide by it’s statutory responsibility to include anticipated climate change effects in its approval of each state’s Hazard Mitigation Plan, the key document that the New England states use in planning how best to avoid weather and climate risks, and be eligible for disaster relief funds. CLF has urged our state congressional delegations to request that FEMA act on the petition, which it has thus far ignored.

As New England communities seek information and resources on best practices to assess and act on our changing climate, a new tool became available this week. NOAA, working with National Wildlife Federation, EPA, and others, has just opened the Northeast Climate Database, a searchable tool to provide regionally relevant climate information. Here you can look for reports and resources specific to a state, a geography such as the ocean shore, or an issue like public health in a warming world.

CLF has long been involved in these issues. From our active involvement in assuring that New England’s climate future is accounted for in National Forest planning, to tackling coastal adaptation issues in Rhode Island, and challenging the EPA for failing to address climate change considerations in its 2008 Lake Champlain cleanup framework, CLF has always been a regional leader in climate adaptation. As CLF staff attorney Anthony Iarrapino said, “Climate change is no longer an ‘if’ or a ‘when.’” I invite you to follow CLF as we act on CLF President John Kassell’s declaration that climate change is the key issue not just for CLF, but for all of us, over the next decade.

(photo credit: Jack Zalium/flickr)

Get ready: long-simmering chatter among lobbyists and officials in state houses and administrative agencies is about to become a loud, insistent chorus proclaiming that New England needs to give Canadian hydropower financial incentives so that our region can meet renewable energy and climate goals. This policy change would be a wrong turn for a region that is trying to build a truly clean energy future.

As we’ve been discussing for several years now, Québec and other eastern Canadian provinces are eager to increase power exports to New England, including through proposed transmission projects like Northern Pass. Our neighbors to the north have developed and are building more power than they need, and, until New England power prices began their historic decline, the economic motivation for increasing exports was clear: Canadian utilities like Hydro-Québec could sell power to customers in New England and the northeastern U.S. at much higher prices than their own domestic customers are paying. Profits from existing exports to the United States were and remain a major contributor to those utilities’ bottom lines, and they saw and planned to take advantage of a major opportunity to increase profits with new transmission capacity and newly developed hydropower facilities.

The economics behind this long-term Canadian strategy are increasingly in question. Following on the heels of recent technical analysis questioning the strategy’s underpinnings, the most recent projections from the U.S. Energy Information Administration show that total U.S. imports of all energy and electricity in particular are slated to decline over the next fifteen years, with electricity imports never again to achieve the peak level of imports seen in 2012. Given the availability of U.S.-based energy supplies at lower long-term prices, especially natural gas but also wind and other renewable sources, there will be less market demand in the U.S. for Canadian power. These projections reflect a very different reality from the prevailing expectations in 2008, when Hydro-Québec’s strategic plan and the Northern Pass proposal were taking shape. In a research note published last week, Stéphane Marione of Canada’s National Bank Financial warned that “none of the Canadian energy-producing provinces can ignore the profound changes that are taking place in the U.S.”

Montréal, we have a problem. In this new world, the potential market profits from Hydro-Québec’s export strategy are far less compelling. Hydro-Québec may not be able to sell power in New England at the prices it needs to recover the costs of building new transmission like the Northern Pass project and new hydropower projects like the Romaine complex and also return substantial export-driven dividends to the provincial budget.

One possible way that Hydro-Quebec could restore some of these profits is by convincing New England states to increase the price New England customers will pay for Canadian hydropower above the market price. While this may directly contradict the widely held assumption (and marketing claim) that Canadian hydropower is a low-cost power source that is economic without any special incentives, the cognitive dissonance has not prevented Hydro-Québec and Northern Pass developer Northeast Utilities from lobbying New England states to achieve just this goal, an effort CLF has opposed around the region, including in New Hampshire. (Hydro-Québec succeeded several years ago in convincing Vermont to allow its power to count towards a portion of the state’s renewable targets.)

Although the utilities’ lobbying is mostly outside the public view, it is increasingly occurring out in the open, with a direct and urgent new tone. Case in point: Hydro-Québec and Northeast Utilities recently filed comments on Connecticut’s draft energy strategy, which contained some language favoring expansion of Connecticut’s renewable portfolio standard program to include Canadian hydropower, the very policy change that the utilities are seeking. (Incidentally, the final strategy, released last week, made a few changes to the language, and Connecticut is now considering whether and how it might incentivize new imports in a separate study, which is due out soon.) So what did they say?

Hydro-Québec, through its U.S. trading subsidiary HQUS, commented that hydropower should be counted towards meeting Connecticut’s renewable objectives and that its hydropower is less costly than other renewables, but not all power in the marketplace:

HQUS urges Connecticut to recognize Hydro-Québec hydropower as a renewable resource and consider how it might contribute to achieving renewable objectives, as well as other important energy and economic goals. HQUS recognizes that Connecticut has multiple objectives for its renewable programs including to support the development of in-state and in-region resources and emerging technologies. However, if Connecticut’s priority is to maintain its commitment to renewable supply in a cost-effective matter, consideration should be given to the participation of Canadian hydropower. Allowing these resources to contribute to renewable objectives offers a pragmatic way for the state to lower program costs in the near term and, if desired, to extend and increase renewable goals into the future. An approach that values the multiple benefits of Canadian hydropower could also create a market signal necessary in today’s market to promote the infrastructure needed for incremental deliveries into the region for the benefit of all consumers….

Some stakeholders suggest that Hydro-Québec hydropower facilities are “cheap” or low cost to construct. This is incorrect. In fact the cost of building hydropower facilities is significant and generally also requires the construction of new transmission facilities to deliver generator output to load centers, which is also very costly. (Hydro-Québec has also proven successful in the development and construction of transmission facilities to deliver large quantities of electricity over long distances.) However, even with the added cost of transmission to deliver hydropower from Quebec into New England, HQUS estimates its costs to be significantly less than the cost of the delivering equivalent quantities of renewable power from other potential renewable resources in and near New England.

Northeast Utilities, through its Connecticut subsidiary Connecticut Light & Power, commented that hydropower delivered through new transmission projects should get incentives, which would count against the state’s current renewable requirements:

Connecticut has an opportunity to tap into Canadian hydroelectric facilities that are available now or under development, through the development of new transmission infrastructure. A Connecticut RPS market design, which acknowledges that RPS can not only enable new generation, but also support new, clean energy transmission infrastructure could, in this instance, provide for significant Connecticut customer savings….

CL&P believes Connecticut could create a new class of RECs for incremental hydro-electric supply that is delivered over a new transmission interconnection that has been built as an economic project (as opposed to a reliability-based one) which would supplant the need for meeting some portion of Class I RPS requirements….

CL&P believes that embracing large scale hydro power delivered on new transmission as a qualified renewable would meet all three of the State’s energy goals:

• It would be cheaper than other clean energy resources,
• It is clean with very low lifecycle CO₂ emissions, established by independent scientific reviews, and
• It is reliable, and would lessen the region’s dependence on natural gas for power generation needs.

It’s clear from these comments – and the utilities’ growing campaign to secure changes to New England’s renewable energy policies – that they are looking for subsidies from electric ratepayers to support new hydropower imports into the region. In fact, the Northeast Utilities comments constitute a direct effort to secure ratepayer subsidies for Canadian hydropower transmitted over Northern Pass, something Northeast Utilities repeatedly claimed it would not seek and does not need (e.g., here, here,  and here).* (For the record, they are mischaracterizing the emissions benefits to support their argument for subsidies. But that’s another story, well chronicled in prior posts.) Certainly, Hydro-Québec’s own comments reveal that its power can no longer beat the market on its own.

It’s also clear that, depending on how it is pursued, this kind of policy change threatens to put New England’s renewable energy industry at a deep and unfair disadvantage and to undermine its growth. Even Northeast Utilities, in the comments linked above, acknowledges this risk.

CLF has been clear that more Canadian hydropower could be a good thing for the region under the right conditions. But why should New England customers be forced to pay an above-market price? State renewable portfolio laws are intended to get new renewable projects built here, not to force ratepayers to pay extra to improve the economics of Québec’s new hydropower facilities and specific transmission development plans. That’s why CLF strongly objected to the draft Connecticut strategy’s mention of potential inclusion of Canadian hydropower in Connecticut’s renewable portfolio standard law. You can read our full comments, which address other major Connecticut energy issues as well, here.

It’s not too late for the New England states to get smart about new imports and make sure that new imports only happen, if at all, in cost-effective ways that allow alternative power sources and companies to compete on a level playing field, respect local communities, and provide meaningful economic and environmental benefits, accounted for in fair and open processes. Committing New England residents and businesses to pay above-market prices for Canadian hydropower isn’t one of them.

* from Northern Pass’s website, accessed today:

Providing economic clean energy—without a government subsidy

This will be one of the few—if not the only—renewable energy projects in the region that does not need a government subsidy to move forward. Hydro-Québec can generate and sell the power to us at prices that will compete with the average market prices that are being set today by fossil fuel power plants.

Image courtesy of shoothead @ flickr

In the past two weeks, Maine’s energy efficiency programs received two significant votes of confidence – votes that will save customers money, will reduce energy use, and help Maine businesses.

The Maine Public Utilities Commission (PUC) recently recommended approval of a $10 million electricity energy efficiency long term contract to fund a program of the Efficiency Maine Trust’s serving industries such as Maine’s paper mills and other large electric energy consumers. Last week, the PUC unanimously approved the Trust’s Triennial Plan and supported funding for the Trust’s electric efficiency programs that could more than double it from current levels.

Both of these approvals are important steps in the right direction: they reflect the PUC’s recognition of the value of Maine’s energy efficiency programs and the need for more funding to maximize their benefit to ratepayers. Unfortunately, the ultimate decision of how much funding the programs approved by these decisions will receive has been left to the Legislature. This politicization of energy policy results from a combination of flaws in Maine law and our PUC’s willingness to defer to politicians in Augusta.

The long term contract could provide up to $10 million in funding to help some of Maine’s largest electricity consumers to purchase technology and equipment that would reduce their energy consumption, such as more efficient motors and lighting. Historically, this successful program has saved more than three dollars for every dollar invested. In 2012 alone, $4.5 million in grants leveraged over $8.6 million of private investment in these largely industrial facilities, creating jobs associated with the individual efficiency projects but also helping to retain employment at the facilities where the projects were installed through the bottom line benefit of savings on energy costs. See the Efficiency Maine Trust’s 2012 Annual Report here.

The approval of the Trust’s three-year efficiency program plan will allow the Trust to maintain its most effective programs and possibly enhance its biggest programs related to electric efficiency, by increasing funding in this area from current levels of approximately $39 million over the next three years to over $96 million. These programs will decrease the amount of energy used in Maine, saving Maine ratepayers millions of dollars by suppressing the price of electricity, limiting the amount of energy that needs to be purchased and helping avoid the construction of new transmission projects. Equally important, the Trust will be less reliant upon the uncertain and limited federal monies that have funded a large chunk its programs over the past three years. The increased certainty of available funds means efficiency contractors and grant recipients will be more likely to invest in their businesses by hiring new employees and stimulating Maine’s economy.

While we generally applaud these decisions, any successful outcome from them is entirely dependent upon funding approvals from the Legislature. This reliance on our political process to assess the value of programs for Maine ratepayers must change. Our PUC must be more bold and must lead on matters of energy policy. Maine law designates the PUC as the sole authority on energy efficiency long term contracts of the sort requested by the Trust. Consequently, the PUC could and should have not only recommended, but approved, the long term contract without the need for subsequent legislative approval. Similarly, though the PUC is legally required to recommend to the Legislature how much funding is needed to maximize energy efficiency in the state, certain Commissioners appear hesitant exert this authority, as reflected in the Commission’s recent Triennial Plan deliberations. As the state’s energy experts, the PUC must use the full extent of its administrative powers to guide on energy policy, not leave such questions to partisan politics.

Indeed, politics should be removed from energy efficiency funding altogether. To achieve this, the Maine law implemented last year shifting final say on certain energy efficiency funding from the PUC to the Legislature must be amended to direct that authority back to the PUC where it belongs. A bill proposing just such a change will be before the Legislature this session. We encourage our legislators to recognize their limitations in this highly complex regulatory area and to restore this efficiency funding decision-making authority to our energy experts at the PUC. That kind of leadership will help steer Maine on a path to better energy policy.

The New Hampshire legislature is being asked to impose a moratorium on wind power projects in the Granite State. In written testimony, CLF and other environmental groups, like the Nature Conservancy, are urging the legislature to reject this proposal. Our position is simple and clear – the wind siting process in New Hampshire may not be perfect but slamming on the brakes with regard to the largest and most immediately available source of truly zero-emissions electrical power available to New Hampshire and New England would be a mistake. Indeed, it would be contrary to New Hampshire’s codified Renewable Portfolio Standard requirements, which seek to increase the amount of wind energy in New England.

CLF, and its allies, are strongly on the record favoring refinement of the New Hampshire energy facility “site evaluation” process, including in joint written testimony filed last week. All major energy projects sited in New Hampshire should be subject to a meaningful, open, and rigorous public review and should directly benefit the state, and wind projects that generate property taxes and lower emissions, if properly sited and planned, will do that. Transmission line projects like Northern Pass should be held to the same standard.

As we increasingly understand the peril our planet and welfare are facing, and the unconscionable harm being imposed on people worldwide by human-induced climate change, we must advance policies and “real projects” to reduce emissions in accordance with the climate and energy goals dictated by science: near complete decarbonization of our energy system. Increasing renewable generating capacity is a core element of decarbonizing, and we should not be delaying projects that help achieve that goal to the benefit of communities and the environment.

Lempster Wind Power Project seen from Pillsbury State Park (Washington, NH)

New England, I'm pleased to say, was well represented at the climate rally in DC this weekend.

“People get ready, there’s a train a-comin’.”  Curtis Mayfield.

Before 50,000 committed supporters, from many states and nations and braving frigid wind-chill temps, Bill McKibben announced on Sunday that all of the work he has done for the last 25 years has been in hopeful anticipation of that moment. The moment when the Climate Movement actually took off.

It certainly felt like a fully loaded train with a big head of steam, on a long journey. It was full of people who have gotten more than ready for the trip, and it was a wide-open, broad and inclusive group. Emcee’d by the Rev. Lennox Yearwood, President of the Hip Hop Caucus, speakers ranged from Van Jones (author, former Obama aide and Pres. of Rebuild the Dream) to Chief Jacqueline Thomas (a First Nation Chief in British Columbia) to Maria Cardona (Founder, Latinovations) to Michael Brune (Sierra Club Exec. Director) and U.S. Senator Sheldon Whitehouse (D-RI). The crowd was the same – young and old, people of all colors, people of faith and non-believers, northerners, southerners, mid-westerners and westerners, people walking and in chairs.

New England, I’m very pleased to say, was well represented, including large delegations from VT, NH and MA (and I’m sure from RI, ME and CT, but I didn’t find them in the large crowd), and topped off by a rousing address from Senator Whitehouse.

Senator Sheldon Whitehouse (D-RI) delivering a rousing address to the crowd.

As Rev. Yearwood put it, “we’re fighting for existence.”

That is not an understatement. Climate models (increasingly showing their accuracy over time, if not underestimation of warming effects) show that unchecked, increasing warming will render large parts of the planet uninhabitable by mammalian life within the next few centuries. If the greater good of humanity (and other species) is not our polar star now, we are failing in our jobs as human beings: to paraphrase Curtis Mayfield again, there is no room among us “for those who would hurt all mankind, just to save [their] own.”

To address a problem that large, it takes a movement. Kudos to Bill McKibben and 350.org, Michael Brune and the Sierra Club, and all of the other groups that have organized, coalesced and launched this train. History will remember them well.

This movement needs to support savvy, well-planned and strategic actions. Sunday’s rally was wisely focused on the Keystone XL pipeline, over which President Obama has unique discretion, under applicable law. While the facts are clear on this one (James Hansen: “game over” for climate if KXL gets built), it is a hugely political game. Circling the White House, calling the President out on his recent commitments to act on climate, playing the political game as it is played, is needed for this vital decision.

But not all vital actions on climate change are like that. We certainly need people in the streets, in villages and barrios, on college campuses and in cornfields and in automobile assembly plants. This is the lifeblood of the movement. But we also need lobbyists and lawyers, economists and highly focused activists, scientists and doctors and investment analysts and progressive regulators – all working the system that shapes our economy.

Shutting down New England’s coal plants, for example, will not happen by marching alone. There is nobody who can do that with the stroke of a pen, as the President can on KXL. Rather, there are many skirmishes and battles to be fought, against extremely entrenched interests who will only succumb when faced with final, non-appealable orders, or when it’s clear they’ll lose more money than their shareholders will accept. The same is true for many fights in the climate campaign: ensuring that any transmission for clean energy is built on the right terms, guarding against overbuilding natural gas infrastructure, fully and properly regulating any fracking activity that is deemed acceptable, adjusting energy markets so that clean energy is favored and dirty energy is disfavored, rebuilding our communities so people don’t need cars as much and can live healthier lives, and many, many more.

“Forward on Climate” is the charge. All the rest is commentary, so to speak. But the commentary – as the Talmudic story goes – is where the work is. We actually move forward by studying and sweating the details, and it takes a long, sustained effort. We’ve been here before. Equal Protection of the laws – what does it really mean? For almost 150 years we’ve been working that out, and paying for it with blood and hopes, dreams and treasure. And lifetimes of effort. Restoring our planet’s climate to some sort of balance – equitable, healthy and just – is another, long-term struggle.

Please join us for this historic journey. Join Conservation Law Foundation. Join other organizations committed to this pivotal fight. We all need your help. And we’ll need it for generations to come. And for their benefit and very survival. “There’s no hiding place” against what we have wrought.

photo courtesy of Shannon Henry @ flickr.com

The past few weeks have not been kind to Vermont Yankee or its owners. Investment analysts continue to raise doubts about Yankee’s economic future. It is costing more to run the plant and its future looks bleak.

In Vermont, hearings began last week before the Public Service Board on whether state approval should be granted. Entergy’s four – that’s right, four – law firms are packing the hearing room, but the plethora of high-priced lawyers are having a hard time showing that Vermont will be better off to keep the plant running. Much of their time is spent raising objections and claiming nearly every matter is out of bounds, and cannot be considered by the Board.

The Board must decide if continued operation is in Vermont’s best interests. Matters of radiological safety cannot be considered by the state board, but matters of economics, power supply and the environment are fair game.

During the first week of hearings, Vermont Yankee’s witnesses were on the stand. It was an impressive collection of corporate executives, economists, professors and power professionals. Their testimony had been previously submitted in writing. The hearings allowed the Board and the parties to ask questions.

Just like the tired old plant, the questions revealed real cracks in Vermont Yankee’s claims. One of Entergy’s top executives acknowledged “very serious issues” regarding “misinformation” about the existence of underground pipes at the plant in 2010. He also acknowledged a number of past incidents where penalties had been imposed for failing to follow required rules.

On power supply, the plant is not needed for reliability. The lights will still stay on without Vermont Yankee. There is an excess of power available in New England and the growth in renewables alone over the next decade is greater than the total output of Vermont Yankee.

When asked about environmental problems at the plant, Entergy’s executive confessed he is not an expert on environmental law noting he took that class “Pass/Fail” in law school. Too bad. Vermont deserves better.

Hearings continue February 19 at the Vermont Public Service Board, and are expected to finish February 25. The Board has asked for additional Entergy witnesses to explain how it has complied with prior commitments and also about events that happened in 2010. The State of Vermont, Conservation Law Foundation and the other parties will then make available their witnesses who will answer questions about power supply, the environment and economics.

Last week I attended the Ninth Annual Rhode Island Local Food Forum, organized by Farm Fresh Rhode Island. The forum’s theme was “Center of the Plate,” reflecting its focus on local protein production. Particularly enlightening was a panel discussion whose moderator, academic chef Bill Idell, posed questions that resonate across the region.  These questions ultimately boil down to two big ones: First, what does a sustainable food system look like? And second, how can we make one happen?

The panel’s meat experts – local guru Pat McNiff of Pat’s Pastured and Mel Coleman from national good-meat powerhouse Niman Ranch – agreed that sustainable meat means raising animals in their natural habitats (not concentrated feedlots) and in a way that feeds both animals and soil. The panelists also highlighted that sustainable food systems require local capacity because geographically concentrated animal operations are at risk from extreme weather: last summer’s drought, for example, “force[d] livestock producers to liquidate herds because feed [wa]s too expensive.” All this means that local meat is not just grown in a place, but it also grows that place by enriching both land (ecologically) and community (economically).

Building capacity for local meat is tough, however, when farmers have limited access to land. This is the case in Rhode Island. Not only is land itself expensive here (as throughout New England), but property and estate taxes can make it almost impossible to keep productive land in agricultural use when it is more valuable as land for development (and is assessed as such for tax purposes). We at CLF are looking closely at this issue.

Moving from the land to the sea, the discussion yielded different insights from the panel’s seafood experts.  “Eating with the Ecosystem” founder Sarah Schumann and seafood-aggregation specialist Jared Auerbach of Red’s Best noted that sustainability means something much different for seafood than for meat, because so many fish and shellfish stocks are wild. They agreed that a sustainable seafood system should be biodiverse – instead of a singleminded focus on cod, for example, a sustainable system would mean sending more fluke, skate, scup, and squid to market. Diversifying the types of seafood we typically eat would allow overfished stocks to recover, and would also contribute to the resiliency of ocean life in the face of climate change and ocean acidification. Furthermore, a sustainable seafood system would mean – to borrow from Sarah Schumann – eating with the (local) ecosystem. Seafood brought in to local ports is easy to trace and to verify species, boat size, and fishing method – factors that are federally regulated but relatively easy to lose track of as more steps are added to the supply chain. Encouraging demand for diverse seafood products, localizing seafood markets with robust tracing and verification systems, and streamlining state and federal fisheries regulations would all help foster local, sustainable seafood systems.

All four panelists, farmers and fishers alike, agreed on another point: we need local, sustainable food systems both to limit and to respond to harms wrought by carbon dioxide emissions. These emissions cause climate change, leading to droughts and other extreme weather that disrupts agriculture; these disruptions, in turn, require robust local systems to add resilience to the global food system. And carbon dioxide emissions also cause ocean acidification, which poses an immediate risk to shellfish and a long-term risk to all ocean life.

All this highlights the importance of CLF’s farm-and-food and climate-change programs. Our work shutting down coal-fired power plants and promoting renewable energy helps to limit emissions that threaten our current food system (not to mention our planet). And our farm-and-food program promotes local and regional food systems that provide a broad range of environmental benefits. As CLF’s newest staff attorney, I am excited to be joining these efforts here in Rhode Island. The Local Food Forum made it clear that there are many good ideas brewing here – we just need to do the work to get our food policy right.

I was on television the other night talking about the impact of sea level rise and storms on Boston and how the impacts of global warming mean that coastal cities like Boston face very real threats. During that interview, I found myself comparing the process of adapting to a changed climate to finding out the house is on fire and grabbing the cat and the kids and getting out – steps that should be followed by calling the Fire Department in order to save the rest of the house and neighborhood.

The climate equivalent of calling the Fire Department is reducing carbon emissions to head off even worse global warming and the wide gamut of effects that we are feeling and will feel from that phenomenon. On the national level, our problem is that Congress is not sure what kind of Fire Department we should have – and in fact a powerful contingent of folks in Congress refuse to believe in the existence of fire.

But here in the upper right hand corner of the U.S., the Northeast and Mid-Atlantic, our state governments have been rolling the big red truck out of the garage and taking action to address the greenhouse gas emissions from power plants, a key source of this pollution causing global warming, by capping carbon emissions through the program known as the Regional Greenhouse Gas Initiative (“RGGI”).

Today, February 7, those states (including the New England states of Massachusetts, Maine, Vermont, New Hampshire, Rhode Island and Connecticut) announced an agreement  to strengthen that cap on carbon  from 165 million tons down to 91 million tons (2012 levels).

This step, along with associated refinements to the RGGI program, is an important step toward meeting the climate imperative of an 80% reduction in greenhouse gas emissions by 2050, but we temper our applause by clearly noting that more sweeping action will be needed to get there. Listen to the wise words of Jonathan Peress, my colleague and our lead advocate on RGGI from our official release marking this announcement:

“This is a very meaningful step in the evolution of RGGI and a powerful example of how markets can drive solutions to climate change,” said N. Jonathan Peress, VP and director of CLF’s Clean Energy and Climate Change program. “Over the past four years, the RGGI program has proven that putting a price on carbon emissions and using the revenues to expand energy efficiency and clean energy as part of our mix is a formula that works. The program refinements announced today will further accelerate the ongoing transition away from dirty and inefficient fossil fuel power plants to meet our energy needs. Once again, the Northeast and Mid-Atlantic states have demonstrated a path forward for others areas of the country.”

RGGI, the nation’s first market-based cap and trade program requires power plants to hold permits, known as “allowances,” for each ton of CO₂ they release into the atmosphere. Revenue from the sale of these allowances is reinvested in energy efficiency programs that reduce costs for businesses and make the states more competitive.

Peress continued, “We applaud the New England states for supporting and strengthening RGGI as an important tool in their toolkits for reducing greenhouse gas emissions and advancing a clean energy economy. The RGGI program has proven that carbon cap-and-trade programs can reduce carbon pollution while contributing to economic growth and prosperity. However, state leaders still have much to do to meet the emissions reductions levels dictated by science and our understanding of what it will take for our region to thrive in the face of climate change. Today’s action to strengthen the regional electric power plant cap-and-trade program is a step in the right direction, but we have a long way to go.”

The new cap level locks in emission reductions achieved to date, and continues to drive additional reductions through 2020. Since it was launched in 2009, economic experts say the increased energy efficiency that RGGI is driving has been generating greater rates of economic growth in each participating state.

How are PSNH’s coal plants like Mark Sanchez? (photo credit: flickr/TexKap)

Earlier this week, the Concord Monitor published a must-read editorial addressing PSNH’s future. Much like an earlier widely-printed op-ed on the subject, the editorial correctly describes the PSNH death spiral of escalating costs, fleeing customers, and dirty inefficient power plants kept alive by massive ratepayer subsidies.

The editorial also points out one key reason why PSNH’s argument that its plants are an insurance policy against high natural gas prices is increasingly off the mark: it ignores the damage that those plants do to the climate and to the environment. In 2012, despite not operating for much of the year, PSNH’s plants were nonetheless collectively the single largest source of greenhouse gas emissions in New Hampshire.

As time goes on, PSNH’s “insurance policy” argument only gets more specious. Relying on inflexible power plants that take many hours to start up and shut down is diametrically at odds with the dynamic and advanced electric grid that will help New England move toward a clean energy future and address concerns around the region’s increasing use of natural gas. We know what we need to do: the region needs to reduce energy demand through cost-effective energy efficiency investments, to deploy clean renewable technologies like wind that displace fossil fuel use, and to optimize the rules of the wholesale electric market to ensure smooth operation of the grid. Indeed, regional grid operator ISO New England’s recent market design efforts will almost certainly make poor-performing, inflexible power plants like PSNH’s less competitive, not more.

Propping up outdated physical assets – with high fixed maintenance costs – in the hopes that they will someday become competitive again is not “insurance.” It’s the kind of backward thinking that no competent manager or economist would endorse.

As a matter of policy, PSNH’s strategy enacts the classic economic mistake of “throwing good money after bad” by placing too much emphasis on “sunk costs,” an unfortunately common problem that James Surowiecki recently discussed in The New Yorker in describing the irrationality of sports teams’ commitments to ineffective players, like the Jets’ Mark Sanchez, after years of poor performance and bloated salaries.

At least sports teams suffer the consequences of their choices – they lose. With guaranteed profit and regulator-approved rates to recover its costs, PSNH and its parent Northeast Utilities have continued to win, even after a decade or more of terrible investment decisions. Unless of course PSNH can be made to pay for the mess it has created.

The key paragraph of the Concord Monitor’s editorial argues precisely this same point:

[L]awmakers must ensure that the lion’s share of the loss is incurred by investors in PSNH’s parent company, Northeast Utilities, not by New Hampshire ratepayers. That includes the huge cost of the mercury scrubber. It was investors, after all, who gambled that it made sense to spend hundreds of millions of dollars to keep an old coal plant running. They could have said no. So it’s investors who should lose if that gamble doesn’t pay off.

As PSNH looks for opportunities to spread its costs to the New Hampshire businesses and households that have escaped PSNH’s high rates, this is timely advice for New Hampshire policymakers. They should heed it.