Governor Patrick Directs Greenhouse Gas Allowance Proceeds to Fund Energy Efficiency, Municipal Assistance, and Winter Energy Cost Efforts
First Regional Greenhouse Gas Initiative auction gives Massachusetts $13.3 million for Green Communities Act priorities
The money comes from Thursday's first-in-the-nation auction by the Regional Greenhouse Gas Initiative (RGGI), and will help fund energy efficiency programs administered by electric and natural gas utilities, the launch of the new Green Communities program, and additional efficiency programs to tackle funding for expected high winter energy costs.
"We will use these funds to help municipalities find greener solutions to their energy challenges, and help consumers reduce their energy bills," said Governor Patrick. "With a difficult winter ahead, we expect to put these resources to work immediately."
The announcement comes as the Winter Energy Costs Task Force, appointed by the Governor, Senate President, and House Speaker, is expected to soon make recommendations on how to address winter energy challenges.
"These proceeds will jump-start many of the energy efficiency and conservation programs established during the last legislative session," Senate President Therese Murray said. "That's good news for all residents because, with energy costs still high, the one sure way to lower your bills is to practice conservation. We expect additional auctions to provide even more funding in the winter months ahead."
"These funds will help Massachusetts residents face soaring energy costs this winter and move our Commonwealth toward a cleaner, more renewable future," said Speaker Salvatore DiMasi. "I commend Governor Patrick and Secretary Bowles for creatively beginning to carry out the bold goals we set together in our nation-leading energy reform."
The first auction of carbon dioxide emissions allowances in the nation took place, entirely online, on Thursday, September 25. This morning RGGI Inc. announced that 12.5 million allowances were sold at a clearing price of $3.07 per allowance. RGGI, Inc. reported that 59 participants from the energy, financial and environmental sectors took part in the auction. The Massachusetts share of the allowance proceeds came to approximately $13.3 million.
The Green Communities Act, signed by Governor Patrick in July, allows RGGI auction proceeds to be used, without further appropriation, to fund the Green Communities program of incentives and assistance for municipalities to adopt energy efficiency and renewable energy measures; to support energy efficiency, conservation and demand response programs; and to reimburse the Commonwealth for administrative costs associated with the cap-and-trade program. Governor Patrick has directed that the $13.3 million in proceeds from the first auction be allocated in the following ways:
- $3.5 million for 2008 utility-administered energy efficiency programs. The Department of Public Utilities (DPU) has before it plans to allocate $7 million for the state's electric and natural gas utilities to aggressively expand their energy efficiency programs to help consumers reduce their winter heating bills. Funds from this auction equaling half the total will be set aside to support those expansions once the DPU approves their cost-effectiveness.
- $5 million for start-up of the Green Communities program. The Green Communities Act creates a Green Communities program of grants and technical assistance to communities for efficiency and renewable energy efforts, funded by RGGI auction proceeds of up to $10 million per year, at the Department of Energy Resources (DOER). Half the funds allowed under the Act will be allocated from the proceeds of the first auction to get the program up and running.
- $4.3 million for additional energy efficiency efforts this winter. Governor Patrick directed that $4.3 million be set aside for measures to address the energy cost challenges of this coming winter through additional efficiency and conservation efforts, subject to the report of the Winter Energy Costs Task Force, which is due in early October.
- $500,000 for administrative and vendor costs associated with Massachusetts's participation in the Regional Greenhouse Gas Initiative and its allowance auctions.
Proceeds of the second RGGI auction, scheduled for December 17, 2008, will be allocated in similar proportions.
"Governor Patrick and I are pleased by the results of the nation's first auction of greenhouse gas permits," said Secretary of Energy and Environmental Affairs Ian Bowles. "Even in a period of market turbulence, the results show the RGGI auction was well structured - and we now have financial resources to devote to meeting the short and long term needs of consumers and municipalities looking for ways to cut energy costs and transition to a clean energy future."
Massachusetts is one of 10 Northeast and Mid-Atlantic states pioneering the first market-based, mandatory cap-and-trade program to reduce greenhouse gas emissions in the U.S. The states have committed to cap and then reduce the amount of carbon dioxide that power plants in their region are allowed to emit, limiting the region's total contribution to atmospheric greenhouse gas levels.
After the 10 participating states have stabilized power sector carbon emissions at their capped level by 2014, the cap will be reduced each year from 2015 through 2018, resulting in a 10 percent reduction overall.
The Commonwealth is represented on the governing board of RGGI by Department of Environmental Protection Commissioner Laurie Burt and DOER Commissioner Phil Giudice.