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Lower Carbon Emissions by Quitting Cap and Trade

            The best way for Delaware to lower power plant carbon dioxide emissions is to quit the Regional Greenhouse Gas Initiative (RGGI). Power plants in Delaware must buy carbon dioxide emission allowances in a quarterly auction. The program is forecast to increase wholesale power prices from Delaware facilities by 8% to 10% compared to non-RGGI states such as New Jersey, Pennsylvania, and Virginia making it less likely new power plants will locate in Delaware. New power plants in Delaware would use natural gas, and would replace out of state coal fired power that emits about twice as much carbon dioxide for each unit of power. 
            In addition, power generated in Delaware will reduce the amount of power needed by about 2% by saving transmission line losses. We currently import about 40% of our electricity, according the U.S. Energy Information Agency. Besides the efficiency losses, the extra transmission distance and associated transmission congestion charges add another 10% to our electric bills.  New power plants add about 350 construction jobs for three years, and about 30 well paying permanent jobs. We need about three new power plants to generate all the electric power we use.
            The Department of Natural Resources & Environmental Control (DNREC) adopted new RGGI auction rules last year through a regulatory process reducing the number of permits available specifically to create a shortage of allowances to raise the auction price to increase revenue to the state. The total cost of RGGI could be $43 million/year, or about $50/year on an average residential electric bill. This year there will only be about 4.4 million allowances available but Delaware power plants will need 5 million, and the problem will get worse if we are fortunate enough to have additional power plants built here. We are left to wonder how the power plants we have will continue to operate.
            The Delaware Constitution says taxes and fees can only be raised by a 3/5 majority vote in the legislature.  DNREC didn’t ask the legislature for permission to raise the auction fees. This is the basis of a lawsuit filed with Caesar Rodney Institute financial support. A request for summary judgment against the DNREC rule change has been filed in Superior Court, and Judge Stokes has set a date of September 30 for oral argument. If the plaintiffs win Delaware should end RGGI participation, which would lower electric bills and ultimately reduce carbon dioxide emissions on a global basis. 
Dave T. Stevenson
Policy Director

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