The Maine Lesson of Cap and Trade

Last week, I referenced an official from Maine saying:

“The investments we are seeing in renewable energy, in energy infrastructure, appear to be the largest wave of capital investment in the state’s history.”

Which is obviously great news for the state, especially during a recession.

Since then, the Kennebec Journal has reported on the formation of the Efficiency Maine Trust, which is significantly funded by the auction of RGGI carbon permits (as well as by federal stimulus dollars). The Trust is exactly the right kind of intersection between carbon pricing, energy effiency investments, and green jobs. It will:

…focus on reducing the demand for energy by making cost-effective financial investments to help people save on electricity and use less heating oil.

“The evidence shows time and time again that we are saving up to three dollars for every dollar we invest,” he said. “Those three dollars stay in the Maine economy, where they get re-spent on other things.”

And that money-saving energy efficiency isn’t just good for the climate. It’s good for job-creation too because it’s stoking demand for labor that is necessarily local:

In addition to providing financial incentives, such as perhaps paying for a business to install more efficient lighting, or giving a small cash bonus to homeowners who replace their outdated refrigerators, the trust will help coordinate marketing and technical support for products like pellet stoves, solar water heaters, and storm windows.

The Maine example is encouraging, but it’s hardly the economic only success story from the nation’s first carbon cap-and-trade program.

Last December, the Baltimore Sun profiled a few of the ways that Maryland is benefitting from RGGI:

..the state has collected more than $96 million in revenue from the six carbon-dioxide auctions held since September 2008, with the funds earmarked for providing relief from energy costs and ultimately reducing greenhouse gas emissions.

Specifically, half the funds this year go to help poor families pay their power bills, while nearly a quarter goes to provide a bit of rate relief for all residential utility customers – about 43 cents on the typical household power bill this winter, according to Quinn.

Another 18 percent goes into promoting energy efficiency and conservation, with an additional 6 percent earmarked to provide grants and low-interest loans for homes and businesses to install “clean” energy systems.

Frank and Lois Bohdal are among more than 600 Marylanders this year who have received state grants funded in part with carbon-auction proceeds to help them put in home solar, wind or geothermal energy systems.

And:

Some of the carbon-auction funds also are going into retrofitting low-income apartment complexes with better insulation and energy-efficient appliances and lighting. The state recently awarded grants to fix up the 158-unit Sierra Woods apartments in Columbia and another complex in Montgomery County. Using the auction proceeds and federal stimulus funds, the state hopes to work on nearly 1,600 apartments this year.

So good news for low income folks, as well as for the workers who will do the energy retrofits. (Good news for the climate too, of course.)

Plus, there are a slew of examples in a story from Scientific American last summer:

BOSTON—Scott Newman was laid off in February from his job repairing home oil heaters, a victim of the dismal economy. Today, he sits in a class with a new job, learning how to sleuth out wasted energy in homes.

Newman is in the vanguard of a green-collar jobs corps created by the nation’s first carbon cap-and-trade program, operating in 10 northeastern states. Workers are being hired for a booming expansion of energy efficiency programs, financed by money raised from power companies paying for their carbon emissions under the program.

For Newman, 32, of Holden, Ma., the salary—about $50,000 a year—is important.

And:

Conservation Services Group, which operates in 22 states, has hired more than 70 people in the last few months, and expects to keep growing, according to CEO Stephen Cowell.

“The plans are in place. The demand is there from the customers. The work is being done. People are being hired,” Cowell said. “For every staff person we hire, the independent contractors have to hire ten people. If we go in and spend four hours looking at a home and identify, on average, $2,500 to $3,000 worth of work people should do, that turns into four days of actual work.”

And:

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…

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.

And:

“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.

Look, I don’t want to get carried away with the rah-rah stuff, but the point is that cap and trade is really working in the US, and it’s showing real benefits for the economy.

It’s not to say that RGGI is flawless, or that green jobs programs are perfectly seamless. It’s to say that the burden of proof rests with the critics. Like other US cap-and trade-programs, RGGI is proving to be remarkably effective, cheaper than expected — and with some very nice fringe benefits for workers to boot.