Greenhouse Gas Initiative the Target of Proposed Legislation

Jan 7, 2016

AUGUSTA, Maine — Maine businesses would receive a 40% increase in funding for their participation in the Regional Greenhouse Gas Initiative, a cap and trade program known as RGGI under a bill advanced by the governor's office. But opponents say changing the RGGI distribution formula would actually result in increased business energy costs.

A legislative panel listened to the pros and cons of the plan during a public hearing today.

As the sponsor of the governor's bill, Sen. Garrett Mason, a Lisbon Falls Republican, told members of the Legislature's Energy, Utilities and Technology Committee, that it has become increasingly clear to him that Maine must try to do something to help businesses cope with the state's high energy costs. Mason favors Gov. Paul LePage's plan that would provide an additional $20 million to businesses over the next three years by increasing the percentage of money they get from the RGGI Trust Fund.

"The bill before you today would return money back from the Regional Greenhouse Gas Initiative — or RGGI — to our businesses, because frankly businesses have the best understanding of what needs to be done to make their business stronger," Mason says.

Mason says his bill would increase the percentage from the current 15% rate to 55%. The program was created in 2007 as a way to reduce pollution by "capping" the amount of carbon dioxide electrical generators produce while also allowing them to buy pollution credits through a regional auction.

The government raises money by selling pollution credits to polluters, and then uses that money to promote energy efficiency to lower electrical bills for businesses and individual consumers. Last year, a report by the Analysis Group concluded that the RGGI program had reduced carbon emissions by a third and created more than 14,000 jobs in the 10 states it covers.

While many of the jobs were temporary, the report found that RGGI has returned nearly $2 billion in proceeds back into each state's economy. Patrick Woodcock, who heads the governor's energy office, says Efficiency Maine, which allocates RGGI funds, would continue to receive funding under the bill, but more importantly, he says it would allow business owners to make needed energy investments.

"Maine's Regional Greenhouse Gas Initiative participation increases electric rates for our businesses, but the bottom line is that that does not have to be the case," Woodcock says. "The state can return the revenue back to businesses as this bill proposes and allow them to make the decisions about how to use the revenue in the manner that works best for their unique business situation."

"The next step for this legislation is both enormous and obvious," says Tony Buxton, an attorney representing the Industrial Energy Consumer Group

He says that while his clients support RGGI, they also favor changes in the funding formula contained within the bill. Buxton told lawmakers that they only need to read list of failed Maine companies to comprehend the impact that high energy costs have had on the manufacturing sector.

"All of us have read the obituaries recently of Lincoln Paper and Tissue, Expera and Verso in Bucksport — before those came many others," Buxton said.

But Dylan Voorhees, of the Natural Resources of Council, says the formula doesn't have to change for businesses to benefit. He says if you leave the $20 million with Efficiency Maine it can draw down even more matching money for energy efficiency programs and incentives.

"If you leave that with Efficiency Maine, they will use that for grants and assistance to businesses, large and small, and it would yield $100 million to $125 million for those businesses," Voorhees says.

Put another way, Voorhees said the bill essentially amounts to raising business energy costs by $100 million. Thomas Tietenberg, of Waterville, told the committee that passing the governor's RGGI bill would result in reduced RGGI incentives and discourage energy upgrades through an evaluation process known as a hurdle test.

"Many times I have heard companies say that without this program, their proposed energy investments would never have been internally accepted by their budget committees because they simply would not have passed the hurdle test," Tietenberg says.

The committee is scheduled to continue its work on the bill at future meeting.