Regional Greenhouse Gas Initiative

Background

ENE has been a stakeholder in the Northeast governors’ negotiations concerning RGGI since they began in 2001. ENE took a leadership role among the 24 energy, business and environmental stakeholders...
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RGGI is the first binding system in the United States to cap and reduce greenhouse gas emissions over time.  Under RGGI, utilities with over 25 megawatts (MW) of fossil fuel—based generating capacity must purchase emissions allowances for every ton of greenhouse gas emitted.  Utilities that reduce emissions will require fewer allowances and utilities with low emission may sell surplus allowances to utilities less able to meet emission reduction targets.  RGGI thus harnesses the market’s capacity to search out cheap emissions reductions and rewards climate-friendly innovation in the electric power sector.

RGGI represents a significant step toward confronting global climate change.  As a whole, the RGGI region, comprising 10 states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont), is the 7th largest global warming polluter in the world.  Reducing emissions in the RGGI region addresses a significant source of greenhouse gases and proves the viability of large cap and trade systems.   

The inaugural RGGI auction held in September 2008 was a success and raised about $39 million. Much of this will be used to fund efficiency and clean energy programs that will help further reduce emissions and deliver economic benefits to consumers. The following auctions have built on this success, and have raised over $582 million for the 10 member states, with $320 million of that dedicated to helping consumers reduce energy consumption and save money on their bills.

ENE released a RGGI Year 1 Evaluation, assessing the program design and implementation to date. The outlook at the end of RGGI’s Year 1 is very positive, for the participating states and for cap and trade as a climate solution. The Northeast’s model shows that a well designed cap and trade auction system works, and RGGI sets important precedents such as controlling consumer costs by investing in energy efficiency, having credible offset requirements and ensuring transparency through third-party market monitoring.

Other ENE resources related to RGGI:

• Each RGGI state determined independently how to allocate allowances and how to spend allowance auction proceeds. ENE developed the RGGI Auction Tracker to track allowance allocations and allowance proceeds spending plans.
• In order to help inform participants of trends that might influence the first auctions, ENE compiled short reports to supply background information on emissions trends and other relevant market factors : Inaugural Auction Report, Second Auction Report, Third Auction Report, Fourth Auction Report.
• ENE followed the design of RGGI’s offset mechanism and presented on offsets to the 2008 meeting of New England Governors and Eastern Canadian Premiers.
• ENE also filed comments on RGGI design elements (such as the cap level and allowance auction) as well as comments on the Model Rule and regulations in CT, MA, ME, NY, VT and NH. See RGGI Document Archive.
• RGGI could be preempted by a federal cap and trade system, and ENE has analyzed the potential impacts of preemption.

ENE is engaged in efforts to develop a  federal cap and trade policy, building on lessons learned through the design and implementation of RGGI.

ENE is also tracking the evolution of other regional cap and trade initiatives, such as the Western Climate Initiative, and has compiled a comparison of key design elements.