May 01, 2006

Energy Efficiency’s Role in a Carbon Cap-and-Trade System: Modeling Results from the Regional Greenhouse Gas Initiative

The American Council for an Energy-Efficient Economy created a report to summarize the regional effects of increased energy efficiency investments in a carbon cap-and-trade policy framework. This, at the time, was the most specific study conducted on energy efficiency’s impact on factors such as allowance prices, energy prices, and economic growth. This report focused on the Regional Greenhouse Gas Initiative (RGGI), a nine-state effort, to develop a regional carbon cap-and-trade system between Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New Jersey, and Delaware. The REMI model was utilized to conduct extensive modeling to assess RGGI’s potential impacts.

The REMI input-output model displayed the positive impacts of increased efficiency investment. An analysis of energy savings from other modeling results showed that 2021 household electricity bills would be an average of $109 less than the reference case demonstrating consumer energy savings. Economic output based on doubling efficiency demonstrated an increased regional economic growth from almost no effect to 0.6% in 2021 compared to the reference case.


RGGI Energy Efficiency and Cap and Trade [Full PDF]