TESTIMONY OF INDUSTRIAL ENERGY CONSUMER GROUP (IECG)
IN OPPOSITION TO
LD 2037, AN ACT TO UPDATE THE
REGIONAL GREENHOUSE GAS INITIATIVE ALLOWANCES
Senator Tepler, Representative Doudera, and Members of the Joint Standing Committee on
Environment and Natural Resources:
Industrial Energy Consumer Group (IECG) is a Maine trade association representing
Maine’s industrial energy consumers. Back in 2007, IECG was the only group of its kind to support Maine’s adoption of the Regional Greenhouse Gas Initiative (RGGI) program. We supported RGGI because we believe Maine must reduce carbon emissions rapidly, affordably, and in ways that deliver the greatest climate benefit per dollar invested.

LD 2037 is well-intentioned, but it is neither disciplined nor cost-effective. At a time when Maine faces an acute electricity-affordability crisis, this bill would make that crisis worse while hindering — not accelerating — economy-wide decarbonization.
Affordability — the ability to pay for the cost of electricity, an essential commodity — is
the biggest crisis facing Maine electricity consumers. IECG members know this firsthand, because they use a lot of power for things like making paper, manufacturing consumer products, and snowmaking at ski areas.

But we also know that the skyrocketing cost of electricity hurts all Maine
consumers: every Maine household, all Maine businesses, and every community institution.

LD 2037 would increase the cost of electricity and eliminate tools, like offsets, that can
provide flexibility and cost containment. Economics 101 teaches us about supply and demand. If we reduce supply, prices will rise. Maine’s history with RGGI proves this point. The graph below shows the price of RGGI allowances from 2008 to present. For about a decade, the price of a RGGI allowance was roughly $5 or less — but since 2018, the price has shot up to exceed $20 per allowance.

RGGI prices continue to climb, with the December 2025 auction setting a new record
high price of $26.73 per ton. The quarterly RGGI price increase of $4.48/ton is the third-largest nominal price increase in RGGI history. This trend underscores the growing cost implications for generators and consumers alike.
RGGI Auction Clearing Price

You won’t see a line item for RGGI costs, because they are hidden in wholesale electricity
costs – but you’re paying for it. Because New England’s fossil generators remain “on the margin” most of the time, their cost of RGGI compliance is included in the wholesale cost of power in New England most of the time. This also means that the cost of RGGI compliance is priced into payments made to all dispatched generators (even low-cost and fuel-free units like nuclear and hydro). At these prices, the cost of RGGI in Maine rates is already on the order of about $100 million per year.

Ask around: “Can you afford any further increases in the cost of electricity?” You will be
hard-pressed to find people who say yes to that question. Maine already faces other headwinds driving up the cost of power: transmission rate increases, distribution rate increases, and net energy billing costs, just to name a few. Combined with broader economic trends, these factors mean that Maine is already in an affordability crisis. This is not the time to double-down on RGGI. Instead, Maine needs to focus on cost-effective solutions.

For the same reasons of cost control, this is not the time to take “offset” projects off the
table. As the Department of Environmental Protection wrote in its March 12, 2025 report to this Committee, “the demand for offset projects and their associated allowances may increase if allowance prices continue to increase”. Given the affordability crisis, now is the time to improve the offset program to reduce consumer costs, not cancel it.

It’s also worth noting that RGGI’s scope is limited to electric power generation. According
to DEP’s latest RGGI report, Maine’s industrial/electric generation sector has reduced its
emissions by 56% relative to the year 2000. Meanwhile, Maine’s commercial sector has reduced its emissions by less than 8%; our transportation systems are only 15% decarbonized compared to 2000; and despite all the effort to deploy heat pumps and other technologies to get homes off oil, the residential sector has reduced emissions by less than 33%.





Measures that increase the cost of electricity will not only exacerbate Maine’s preexisting
affordability crisis; they will also prevent progress toward decarbonization of every sector, by making electricity too expensive as an alternative to carbon-intense fossil fuels like home heating oil, gasoline, and diesel. So if you care about the climate, as you should, you should not support this measure.

For these reasons, I respectfully urge the Committee to vote Ought Not To Pass on LD
2037. Thank you for your consideration. I would be glad to answer any questions.

Testimony in Opposition to LD 2037:
“An Act to Update the Regional Greenhouse Gas Initiative Allowances
Senator Tepler, Representative Doudera, and distinguished members of the Joint
Standing Committee on Environment and Natural Resources, my name is Harris Van
Pate, and I serve as policy analyst for Maine Policy Institute. Maine Policy is a free
market think tank, a nonpartisan, nonprofit organization that advocates for individual
liberty and economic freedom in Maine. Thank you for the opportunity to submit
testimony in opposition to LD 2037, “An Act to Update the Regional Greenhouse Gas
Initiative Allowances.”
Overview
Maine Policy Institute (MPI) respectfully opposes LD 2037. This bill accelerates and
hard-codes steep reductions in Maine’s carbon dioxide allowance budget under the
Regional Greenhouse Gas Initiative (RGGI), further tightening an already costly
regulatory regime. By design, these changes increase electricity prices for Maine
households and employers while delivering no measurable climate benefit.
LD 2037 exemplifies the broader problem identified in MPI’s recent report, Alternatives
to New England’s Energy Affordability Crisis: energy policy in New England has become
increasingly detached from affordability, reliability, and realistic cost-benefit analysis.
RGGI Is an Energy Cost Driver, Not a Cost-Control Mechanism
RGGI operates as a de facto carbon tax on electricity generation. When allowance caps
are tightened, allowance prices rise, and those costs are passed directly through to
ratepayers. LD 2037 accelerates this process by sharply reducing Maine’s allowable
emissions budget through 2037 and beyond, increasing allowance scarcity by statute
rather than allowing for adjustment based on market or reliability conditions.
MPI’s energy affordability research shows that policies designed to artificially restrict
dispatchable generation—such as natural gas—are a central driver of rising electricity
costs across New England. Under aggressive decarbonization scenarios, regional
electricity prices more than doubled by mid-century, imposing severe burdens on
residential, commercial, and industrial customers.
Higher Costs With No Commensurate Climate Benefit
LD 2037 imposes real, immediate economic costs on Maine residents in exchange for
symbolic emissions reductions. Maine’s power-sector emissions are negligible on a
global scale, and even complete elimination would have no discernible impact on global
temperatures or climate trends.
MPI’s report demonstrates that the most aggressive renewable-heavy decarbonization
pathways are also the most expensive, costing New England electricity customers
hundreds of billions of dollars more than alternative portfolios that prioritize reliability
and fuel diversity. LD 2037 moves Maine further toward this high-cost path without
delivering proportional environmental gains.
Affordability and Reliability Risks for Maine
New England already has some of the highest electricity prices in the United States, and
Maine households are particularly vulnerable due to lower average incomes, colder
winters, and heavy reliance on electric and electric-adjacent heating costs. MPI’s
analysis shows that policies restricting dispatchable generation increase system costs,
transmission build-outs, and reliability risks—raising the likelihood of price spikes and,
over time, grid instability.
By doubling down on RGGI and eliminating policy flexibility, LD 2037 increases these
risks while narrowing future lawmakers’ ability to respond to changing technology, fuel
markets, or reliability concerns.
A More Affordable Path Forward Exists
MPI’s research demonstrates that not only will continuing energy mandate have a
substantial cost on Mainers, they also demonstrate that reliability and affordability will
continue to decline for all Mainers until we alter our current course. Scenarios that
preserve fuel diversity and prioritize reliable, dispatchable generation—particularly
natural gas and nuclear—achieve substantial emissions reductions at dramatically lower
cost than renewable-mandate-driven approaches. LD 2037 ignores these findings and
instead entrenches one of the most expensive policy tools available.
Conclusion
LD 2037 would raise electricity costs, reduce policy flexibility, and worsen New
England’s energy affordability crisis while producing no meaningful climate benefit. For
these reasons, the Maine Policy Institute urges the Committee to oppose LD 2037 and to
instead pursue energy policies grounded in affordability, reliability, and empirical
evidence. Thank you for your time and consideration.