Maryland Regional Greenhouse Gas Initiative (RGGI)

The Maryland Department of the Environment (MDE) has contracted with the University of Maryland, through the Center for Integrative Environmental Research, to conduct an independent study of the economic and energy impacts related to Maryland’s potential participation in the Regional Greenhouse Gas Initiative (RGGI).

Background

On April 6, 2006, Maryland Governor Robert Ehrlich signed into law the Maryland Healthy Air Act, which had been passed with large majorities in Maryland’s General Assembly. The purpose of the law is to improve air quality in Maryland by requiring power plants in the state to reduce a variety of emissions, including sulfur dioxide, nitrogen oxides, and mercury. In addition, the law requires the six largest power plants in the state to reduce emissions of carbon dioxide, a significant greenhouse gas.

 Production of electric power is vital to the State of Maryland but greenhouse gases, such as carbon dioxide that are a byproduct of this production represent a significant negative externality. It is important to carefully balance the gains from inexpensive and reliable electricity with programs to mitigate the negative environmental effects of these gases. To this end, the Maryland Healthy Air Act (Senate Bill 154) was recently passed. This bill requires the State to become a full participant in the Regional Greenhouse Gas Initiative (RGGI) no later than June 30, 2007. RGGI currently comprises seven Northeastern and Mid-Atlantic states that in December 2005 entered into a memorandum of understanding to develop and implement a carbon dioxide emissions trading program for electric generators located within their states. The trading program would begin in January 2009.

Key Project Staff

University of Maryland, College Park

Principal Investigator (Phase 1 & 2): Dr. Matthias Ruth, Director, Center for Integrative Environmental Research and Professor, School of Public Policy

Co-Principal Investigator (Phase 1): Dr. Steven Gabriel, Associate Professor, Department of Civil and Environmental Engineering and Center for Integrative Environmental Research.

Project Manager (Phase 1 & 2): Kimberly Ross, Executive Director, Center for Integrative Environmental Research

Stakeholder Engagement (Phase 1): Daniel Nees, Director, Maryland Environmental Finance Center

Graduate Assistants (Phase 2): Ivan Dario Valencia, Joanna Mauer
(Phase 1): Sanjana Ahmad, Russell Conklin and Julia Miller

Towson State University (Phase 1 & 2)

Dr. Daraius Irani, Director, Applied Economics, RESI
Dana Hawkins, Research Economist, RESI
Jeff Michael, Associate Professor of Economics

Resources for the Future (Phase 1 & 2)

Dallas Burtraw, Senior Fellow
Karen Palmer, Senior Fellow
Anthony Paul, Madison-Atlantic

Johns Hopkins University (Phase 1 & 2)

Dr. Ben Hobbs, Professor, Department of Geography and Environmental Engineering

University of California, Merced (Phase 1 & 2)

Yishu Chen, Assistant Professor in Envirionmental Economics, School of Engineering and School of Social Sciences, Humanities and Arts

Based on requirements from MDE, this project will analyze multiple aspects of the RGGI program and how it both positively and potentially negatively might affect the State of Maryland as well as neighboring regions. In particular, our impact study will evaluate whether the State's participation in the RGGI has or may have an adverse impact on the:

-- Preservation and enhancement of the economic welfare of the residents of the State;
-- Maintenance of a safe and reliable electric power supply in the State,
-- Adequacy of the energy supply in the State, including the potential for power plant shutdowns,
-- Ability of persons who own, lease, operate, or control an affected facility to compete in neighboring states, or,
-- Electric rates for residents of the State.

The study shall take into consideration a number of factors, including:

-- The number of states that are included as full participants in the RGGI,
-- The mix of energy resources in the states that are included as full participants in the RGGI; and,
-- Availability of credits among participating states.

The analysis of the aforementioned items is a complex task which necessarily involves experts in energy, the environment, economics, and modeling. To this end, the University of Maryland’s Center for Integrative Environmental Research (CIER) has assembled a talented team of researchers and industry experts. CIER will have overall responsibility for the project making sure that the issues mentioned above are carefully analyzed and reported in a clear and comprehensive way.

Project Modeling Researchers from Johns Hopkins University (JHU) and Resources for the Future (RFF) will be partnering with the University of Maryland as subcontractors, and will be applying their expertise in the modeling of the electric power grid as well as the resulting environmental impacts. In particular, both JHU and RFF will be using existing models -- Oligopolistic Power Market Model (JHU) and Haiku Model (RFF) -- that can directly answer questions such as adequacy of the energy supply, generator competitiveness, electricity rates, and reliability issues in addition to providing some summary economic measures such as producer and consumer surplus. These models have already been applied in different contexts to address energy sector issues in Maryland. In addition, the University of Maryland itself will draw upon its expertise in electric power and environmental issues. In terms of the economic effects, Towson University’s (TU) RESI will be brought in to use their input-output model to measure the economic welfare impact of RGGI participation on the State of Maryland.

View details on each modeling approach by clicking here.

The resulting analysis and report will consequently provide the State with a comprehensive review of all of the major impacts of Maryland’s participation in RGGI so that it can make appropriate decisions for the benefit of Maryland and its residents. The assessments presented to the State will be based on the best available science, modeling and economic analysis conducted by the most qualified individuals and institutions. A study report detailing the result of the various model runs will be provided to MDE in January 2007