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Business and Economy

Large Maine Companies to Get Millions Back in Cap-and-Trade Payments

Sixteen of Maine’s biggest manufacturers, from Verso Paper to Jackson Laboratories, are in line to get millions of dollars from the Regional Greenhouse Gas Initiative, or RGGI. The payments are seen by some as equitable payback for the millions the companies have shelled out for the cap and trade program.

RGGI, a nine-state effort to hold down pollution by capping carbon emissions electricity plants are allowed to produce, creates a market for allowances for them to emit more, with more efficient plants selling pollution credits to less efficient plants. That penalizes the worst polluters and puts a lid on overall emissions. It also raises electricity prices for everyone, and can be a big burden for some energy-intensive companies such as paper mills.

Now the biggest manufacturers are going to get some money back.

“Frankly if we had done this a year or two ago, I don’t believe Madison would have closed. It’s that much money,” says Tony Buxton, a lobbyist for the Industrial Energy Consumers Group, which includes several of the manufacturers involved.

In the past, proceeds from auctioning those RGGI credits, about $10 million a year, have historically gone to Efficiency Maine. The money is then used to encourage investments in residential, commercial and industrial energy efficiency initiatives, such as state-of-the-art boilers and HVAC systems or LED-lighting.

But earlier this year, Gov. Paul LePage and lawmakers agreed that RGGI’s costs to big manufacturers were a lot more than they were getting back through Efficiency Maine’s programs. So they decided to shunt a little more than a quarter of the funds directly to those businesses.

Mark Vannoy, chairman of the state Public Utilities Commission, says the commission’s job is to divide that pie up in proportion to how much energy qualifying companies use.

“What’s unique here is that in the last legislative session, the Legislature enacted a statute that directs … $3 million per year for the next three years for the Commission to disburse to what are called by statute ‘affected customers,’” he says.

That is, paper mills such as Verso or Sappi, food and water packagers such as Poland Spring or Cherryfield Foods and big metal-working outfits such as Bath Iron Works. And they get the funds, no strings attached, to use as they will — offset price hikes in winter energy costs, for instance, or invest in new equipment or make more hires.

The new statute also stipulates that if they invest in energy efficiency, the state will provide another $1 match for every $3 spent.

Verso will get the largest single payback under the new system — $766,000. That’s roughly equal, Buxton says, to what RGGI costs the company annually.

“It makes all the difference in the world. And it’s not like they didn’t pay it in,” he says.

In addition to the companies already mentioned, others that will benefit include Sappi North America, Irving Products, Huhtamaki Inc. and Texas Instruments.

And the Commission made a special determination that Jackson Labs would get a small portion of the funds, too — it qualified as a manufacturer, the Commission ruled, because it makes mice.