The RGGI cap-and-trade program is touted as a precursor to a national program from the Obama administration. But the weak economy and decisions by power companies to switch to cheaper natural gas have dropped real carbon dioxide emissions in the region to a level about 19 percent below the RGGI caps. Some argue this has made the government-set caps meaningless and undercuts the value of the program; others disagree.
But there is little dispute the program is achieving one main goal, to finance an aggressive expansion of energy efficiency programs. The first auctions of carbon dioxide allowances held in September, December and March produced $262 million for the programs, just the beginning of a steady stream of funds being funneled to the 10 participating states.
The states, in turn, have started distributing grants to utilities and organizations that will run the programs, which have started hiring contractors like CSG to do the actual work.
That is nurturing efforts small and large. On Cape Cod and Martha's Vineyard, a contractor for the Cape Light Compact has hired four new energy auditors to inspect low-income homes. In Clinton, Maine, Weatherization Wizards, a start-up company, has added a third van and workers to meet insulating demands resulting from audits. On the Native American reservation of the Passamaquoddy tribe in eastern Maine, three homes are being inspected to provide a blueprint for weatherizing many of the tribal members' 412 homes.
On a larger scale, National Grid will be hiring 100 more people just to administer the energy efficiency programs in Massachusetts. "We are very pleased," said Tim Stout, vice president for energy efficiency at the utility, which already has seen a sharp increase in energy savings by customers. "The demand for the programs has gone up dramatically, even with the economic downturn."
Saving energy is seen as the easiest and cheapest method of reducing dependence on fossil fuels. Efficiency programs typically spend about 3 cents to save a kilowatt hour of electricity that would otherwise cost from 6 to 19 cents to produce by coal, natural gas or oil power plants. And improvements such as insulation, newer efficient boilers and tighter windows can repay the homeowners' investment by lowering utility bills.
The efficiency programs that were hatched for environmental goals have taken on greater importance as the recession has created a need for new jobs. The RGGI cap-and-trade money is arriving just ahead of an even bigger – but likely short-lived – flush of federal stimulus money also earmarked for energy efficiency programs.
"This is actually going to help revive the economy," said Frank Gorke, director of energy efficiency programs for the Massachusetts Department of Energy Resources. The state has had such programs for about two decades, but with the RGGI and stimulus money, the state will probably "triple or quadruple" the $125 million now devoted to the programs, said Gorke.
"It becomes a question of how much you can spend, how quickly you can ramp up, how quickly you can have the people on the ground," he said.
The number of jobs created will depend greatly on how states shape the programs. It requires far more workers, for example, to inspect and upgrade scores of individual residences than if the program is aimed at commercial users. But improving efficiency at a few big industries could provide greater energy savings.
Kevin Doyle, who runs the Green Economy consulting firm in Watertown, Ma., cautions against hyping the jobs to be created by these programs. In a study he is preparing on Massachusetts for the New England Clean Energy Council, Doyle estimates the RGGI and stimulus programs will support the equivalent of about 1,100 direct, full-time jobs in the next two years in the state.