New Analysis Quantifies Economic Impact of Regional Greenhouse Gas Initiative in Ten States

November 15, 2011

In a new report, "The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States," Analysis Group researchers have quantified the economic benefits from implementation of a multistate regional greenhouse gas initiative.

The study, which will be the focus of an article in The Electricity Journal (December 2011), examines the impact of investments made by 10 states that participate in the Regional Greenhouse Gas Initiative, or RGGI, in its first three years of existence. It is the first report to measure the economic impact of such a program across all states in the region by focusing on the actual impacts of economic activity, using a rigorous "follow the money" approach and well-established modeling tools and methods.

The Analysis Group team – Managing Principal Susan F. Tierney, Vice President Paul J. Hibbard, Manager Andrea M. Okie, and Associate Pavel G. Darling – “tracked the path of RGGI-related dollars as they leave the pockets of generators who buy CO2 allowances, show up in electricity prices and customer bills, make their way into state expenditure accounts, and then roll out into the economy.”

Key findings include:

  • The regional economy gains more than $1.6 billion in economic value added (reflecting the difference between total revenues in the overall economy, less the cost to produce goods and services)
  • Customers save nearly $1.1 billion on electricity bills, and an additional $174 million on natural gas and heating oil bills, for a total of $1.3 billion in savings over the next decade through installation of energy efficiency measures using funding from RGGI auction proceeds to date
  • 16,000 jobs are created region wide
  • Reduced demand for fossil fuels keeps more than $765 million in the local economy
  • Power plant owners experience $1.6 billion in lower revenue over time, although they overall had higher revenues than costs as a result of RGGI during the 2009-2011 period

The authors conclude that "by carefully examining the states' implementation of RGGI to date, based on real data, we hope to provide a solid foundation for observations that can be used by others in future program design and to inform deliberations about RGGI going forward." The report has garnered widespread media coverage, including mentions in the New York Times, the Baltimore Sun, ClimateWire, and several online sites.