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 able to reduce emissions below their respective allowance totals may sell surplus allowances to utilities that are unable 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 December 2008 and March 2009 auctions built on this success. They had full participation from all RGGI states and each raised over $100 million.

Since the process began in 2001 ENE has participated in the formulation of RGGI, and ENE continues to monitor rule-making and implementation.

• In 2005-6 ENE participated in the drafting of a Memorandum of Understanding and Model Rule. 
• ENE weighed in on the establishment of an emissions cap level, and has proposed policy solutions for a cap level set too high.
• ENE has supported auctioning of emissions allowances, and has commented on the proposed auction design. ENE supports the dedication of auction proceeds to programs for the consumer benefit, such as energy efficiency.
• 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 continuously monitors rulemaking at the state level, and has commented on regulations in Connecticut, Maine, Maryland, Massachusetts, New York and Vermont and on economic modeling of RGGI effects in New Hampshire.
• ENE followed the inaugural RGGI allowance auction on September 25, 2008, and has prepared primers on the auction process and use of auction proceeds for Connecticut, Massachusetts, Maine and Rhode Island.
• In order to help inform participants of trends that might influence the first three auctions, ENE compiled short reports to supply background information: Inaugural Auction Report, Second Auction Report, and Third Auction Report.
• RGGI states independently determined how to allocate allowances and how to spend allowance auction proceeds. ENE developed the RGGI Auction Tracker to track allowance allocations and distribution of auction proceeds through the first and second auctions.
• ENE has tracked the evolution of other regional cap and trade initiatives, such as the Western Climate Initiative, and has compiled a comparison of key design elements.