Nation's first greenhouse gas cap-and-trade auction launches

 

Greenhouse gas cap-and-trade - CleanSpeak - Steve HodgdonIn case you missed it (most people did), yesterday saw the launch of the nation's first mandatory cap-and-trade auction for carbon emission credits ... with little fanfare. 

Ten northeastern states, including our little Granite, will let polluters bid on a limited amount CO2 allowances - 188 million tons of carbon emissions annually, to be exact. The StateRegional Greenhouse Gas Initiative, or RGGI (pronounced 'Reggie'), will cap emissions for 233 power plants, with a goal of reducing the cap an additional 10% by 2018. 

But already the system has its critics. After a tepid first day of trading, the Wall Street Journal took a skeptical view of the program's long-term viability. The New York Times pointed out how emissions cap will have little impact at first because it's based on overestimates of CO2 output. And others cry that it's no more than a tax in green clothing that will raise electric rates (which it probably will, at first, but lower over the long term).

But the critics are shortsighted. What's more more important is that a real, free market-based cap-and-trade system for global warming reduction is now in place. There's a platform and regulatory mandate for cutting greenhouse gasses that didn't exist before. It's a build-it-and-they-will-come opportunity. It's a good first step.

Call me a green romantic. I know RGGI won't save the world right away, but at least we're finally giving power companies financial incentives to modernize plants, reduce emissions and explore alternative energy approaches. The program freezes greenhouse gases from power plants at current levels, and promises significant reductions long term.

Greening the grid: Big Brother or big savings?

Greening the grid: big brother or big savings? Steve Hodgdon Beaupre & Co.Homeowners tend to cast a cold eye on their electric utilities, particularly when it’s time to pay the bill or when the power fails. So it’s no wonder that a new clean technology initiative from the utility industry called Advanced Metering Infrastructure (AMI) has consumer advocates suspicious with some calling it a Big Brother-like intrusion into folks’ homes.

In a nutshell, AMI aims to help conserve energy by enabling two-way communications between the home and the utility through a wireless network of smart meters and smart devices in the home. Picture a smart air conditioner that the utility can turn down remotely when an over-extended power grid starts straining.

AMI will let consumers and utilities work together to conserve energy consumption in the home during peak energy demand periods. It will also let homeowners see when, how and why they’re sucking down kilowatts so that they can make smarter, greener lifestyle decisions. Consumers benefit by saving energy and getting discount rates for playing ball with the utilities. Utilities benefit by avoiding brown-outs and black-outs during demand response periods. 

Despite the obvious merits, it’s a potentially huge PR challenge that the utility industry has yet to take seriously, which is unfortunate because the critics are on the wrong side of the debate this time, IMO.

What’s not to like? Opponents claim it's a waste of ratepayer money that hasn't proven it will reduce electricity usage. They say that fluctuating time-of-day pricing will give utilities the opportunity to raise, not lower, prices. And they don’t like the idea of giving the power company the power to reach in and have their way with your home. Ratepayer advocates such as TURN, The Utility Reform Network, have already launched aggressive legal and political campaigns against the initiative in California and elsewhere.

As a skeptic who never likes to pass up an opportunity to stick it to The Man, I should be wary too. But homes and buildings are worse polluters and energy guzzlers than cars. And ever-growing energy demand, wars for oil and climate change are just a few good reasons for taking risks on new technologies that stand to conserve energy in homes. It will be interesting to see how well the utility industry can counter the ratepayer backlash and rally support for its new initiative.
{Disclosure: Beaupre client, Ember, makes wireless chips that enable AMI applications}
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UPDATE: Celeste LeCompte at GigaOM covers the issue from the home appliance perspective.
UPDATE: The Wall Street Journal also weighs in.

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