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* 65-70 pct of the cash goes to efficiency, clean energy
* 12 percent set to help trim NY, NJ budget deficits
By Timothy Gardner
WASHINGTON, March 24 (Reuters) - As three U.S. senators try to resuscitate a climate change bill this year, a regional cap-and-trade market on carbon dioxide is showing the system can generate revenues to fund energy efficiency.
The Regional Greenhouse Gas Initiative, which caps carbon emissions from power plants in 10 states from Maine to Maryland, has raised $580 million for the states in quarterly auctions of permits to pollute carbon since September 2008.
While two states are using a portion of the proceeds to shore up finances, the lion's share is going toward clean energy in the Northeast.
RGGI sells more than 90 percent of the permits in auctions. Power plants buy them because the program requires them to hold an amount of allowances equal to their emissions. Other buyers have been financial investors, who hope permit values will go up as the cap falls, and environmental groups hoping to push up the price to pollute.
Auctions in any national cap-and-trade market could raise billions of dollars if implemented. Big emitters like power companies and refiners have insisted that the government give permits away for free at first in the plan being shaped by Senators John Kerry, a Democrat, Lindsey Graham, a Republican, and Joe Lieberman, an independent.
About 55 percent of the RGGI auction proceeds are going to the energy efficiency programs, RGGI Inc's executive director Jonathan Schrag, said at the Wall Street Green Trading Summit on Tuesday.
The projects range from job training to turn unemployed construction workers in New Hampshire into new window installers or to pay contractors to help weatherize schools in Massachusetts, Schrag said.
About 15 percent is going to deploy low carbon energy like wind and solar power.
RGGI's efforts are being watched closely by utilities, refiners, factories and other emitters as the senators and California work on plans to cut emissions of gases blamed for warming the planet while encouraging the growth of clean domestic energy.
In addition, the European Union is hoping to add auctions to its carbon market next year.
Keeping the RGGI money from being used for non-energy purposes has not been easy. In fact two states have raided some of the proceeds to help ease their big budget deficits.
Last week Governor Chris Christie of New Jersey said his state plans to move $65 million of auction proceeds from its Global Warming Solutions Fund to help trim the state's huge deficit. Late last year, New York Governor David Paterson said he would take $90 million from auction proceeds in that state to help cut its deficit.
Some 12 percent of the RGGI proceeds will go toward trimming New York and New Jersey's state deficits if the moves are fully realized, Schrag said.
"But I think the overall picture of somewhere between 65 and 70 percent of cap-and-trade proceeds going back into the clean energy economy ... is really an important point to underline on the integrity of the state rules and the commitment to reinvest and build," clean energy, Schrag said.
About 12 to 13 percent of the money goes to consumer energy bill assistance for low income people targeted through federal programs while the remaining amount goes to experimental programs, he said.
In the federal program being considered by the U.S. senators carbon auctions would be rolled out more gradually.
The senators plan to publicly release an outline of a climate bill sometime next month, but the legislation faces stiff opposition from lawmakers in states rich in fossil fuels.
The senators haven't finalized details, but favor initially giving away the permits to polluters and then implementing auctions from 2022 to 2025, moving to 100 percent auctioning five or 10 years after that, an industry source said. (Reporting by Timothy Gardner; Editing by Alden Bentley)