SOLUTIONS RGGI

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort by ten northeastern states to reduce global warming pollution from power plants. This landmark program, initiated by then-New York Governor George  Pataki in April 2003, is creating the nation's first multi-state trading market for carbon dioxide emissions.

The goal of RGGI is to:

• Initiate a shift in the Northeast’s electric generation facilities toward more efficient generation and a cleaner, less carbon-intensive fuel mix;
  
• Achieve this though a flexible and cost-effective system of emissions permit auctioning, trading, and the use of a limited number of “offsets” (emissions reductions that are not part of the electric power generating sector); and
  
• Counter any resulting rate increases (which are predicted to be small) through investment of the proceeds from the program in energy efficiency and renewable energy technology deployment programs

After extended negotiations, seven states—Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont—officially agreed to the framework of RGGI in December 2005. Although both Massachusetts and Rhode Island were active participants in designing the framework, then-Governor Mitt Romney withdrew Massachusetts at the last minute and Rhode Island Governor Donald Carcieri followed suit. Countering those defections, in March 2006 the Maryland legislature passed a law requiring the state to join the regional effort by June 2007.

On January 18, 2007, new Massachusetts Governor Deval Patrick delivered on a campaign promise to have the Commonwealth rejoin the effort. Less than two weeks later, Rhode Island Governor Don Carcieri also brought his state back into the program.  Maryland formally joined RGGI in April, bring the number of participating states to ten.  .

RGGI will to stabilize - at 2005 levels – the overall level of carbon dioxide emissions allowed from power plants in the region starting in 2009 through 2014, followed by a 10 percent reduction in emissions by 2019. In order to accomplish this, the total amount of emissions allowed under the plan (measured in tons of CO2) has been divided into individual permits ("allowances") and allocated by state. Plant owners will need to hold a number of allowances equal to their emissions, but will be able to buy and sell them, and also be allowed to meet up to 3.3 percent of their requirement by purchasing "offsets" (defined above).

The Northeast is gathering strong momentum toward successful implementation of the nation's first multi-state cap-and-trade regime to limit CO2 emissions.  In July 2006, the states agreed on a "model rule" based on the framework agreement signed by the Governors. The model rule is a template for the specific regulations each state must enact within its borders; they must be consistent from state to state in order for  RGGI to operate. Some states will implement the rule through administrative rulemaking and some through legislation. As of July 2007, most the states are developing strong rules that include provisions to auction 100 percent of the allowances created under the program and specifying that those proceeds must be invested in energy efficiency and renewable energy development within the state.

RGGI represents an important first step in tackling emissions reductions, and provides a strong policy template for the nation, demonstrating the viability and effectiveness of a market-based approach to level and then reduce greenhouse gas emissions.