Through the end of 2012, the nine states remaining in the Regional Greenhouse Gas Initiative invested just over $707 million of the proceeds from the RGGI Auctions. But the impact this money will have in the future is even more impressive. According to a report released this week, these investments are projected to return more than $2 billion in lifetime energy bill savings to more than 3 million participating households and 12,000 businesses in the region. Over the lifetime of these programs the states have funded thus far, they will offset a projected 8.5 million megawatt hours of electricity generation, save more than 37 million mmBTU of fossil fuels, and avoid the release of approximately 8 million short tons of CO2 pollution. That’s the equivalent of taking 1.4 million cars off the road.
The vast majority of the state-invested funds have gone to energy efficiency programs in the region — 73% of investments in 2012 and 65% of cumulative investments. Those investments alone are expected to return more than $1.8 billion in lifetime energy bill savings to consumers in the region. As the RGGI report points out, all electricity consumers see benefits from energy efficiency programs, not just those who make the upgrades. Lower overall demand for electricity results in lower wholesale electricity rates, as power plants with the highest costs (often the oldest and dirtiest) do not run as often, and expensive transmission upgrades can sometimes be deferred.
In other RGGI news, our prediction that RGGI allowances might be a hot new investment tip turned out to be pretty accurate. A Potomac Economics report released this week found that trading of allowances on the secondary market (i.e. outside of the state-run auctions) was 56% higher in the fourth quarter of 2013 than the same time period in 2012, and the volume of allowances sold rose from 4 million in the third quarter of 2013 to 29.8 million in the fourth quarter. These increases in price and trading volume seem to have been sparked by recent changes in the cap-and-trade program. RGGI’s 23rd auction, which is also the first auction under the new rules and reduced cap, will occur on March 5, offering 18.4 million allowances.