* 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 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
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
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
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)