Regional Greenhouse Gas Initiative
The Regional Greenhouse Gas Initiative (RGGI, pronounced "Reggie") is the first mandatory market-based program to reduce greenhouse gas emissions by the United States. RGGI is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia to cap and reduce carbon dioxide (CO2) emissions from the power sector.[1] RGGI compliance obligations apply to fossil-fueled power plants 25 megawatts (MW) and larger within the 11-state region.[2] Pennsylvania's participation in the RGGI cooperative was ruled unconstitutional on November 1, 2023,[3] although that decision has been appealed.[4] North Carolina's entrance into RGGI has been blocked by the enactment of the state's fiscal year 2023–25 budget.[5]
Abbreviation
RGGI or ReGGIe
2009
Combating global warming
New York, NY
Participants: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, Virginia
RGGI establishes a regional cap on the amount of CO2 pollution that power plants can emit by issuing a limited number of tradable CO2 allowances. Each allowance represents an authorization for a regulated power plant to emit one short ton of CO2. Individual CO2 budget trading programs in each RGGI state together create a regional market for CO2 allowances.[6]
The RGGI states distribute over 90 percent of allowances through quarterly auctions.[7] These allowance auctions generate proceeds, which participating states are able to invest in strategic energy and consumer benefit programs. Programs funded through RGGI have included energy efficiency, clean and renewable energy, greenhouse gas abatement, and direct bill assistance.
An initial milestone program's development occurred in 2005, when seven states signed a memorandum of understanding announcing an agreement to implement RGGI.[8] The RGGI states then established individual CO2 budget trading programs, based on the RGGI Model Rule.[9] The first pre-compliance RGGI auction took place in September 2008, and the program became effective on January 1, 2009. The RGGI program is currently in its fifth three-year compliance period, which began January 1, 2021.[10]
Compliance[edit]
RGGI compliance obligations apply to fossil-fueled power plants 25MW and larger within the RGGI region. As of 2021, there were 203 such covered sources.[30]
Under RGGI, sources are required to possess CO2 allowances equal to their CO2 emissions over a three-year control period. A CO2 allowance represents a limited authorization to emit one ton of CO2. The first three-year control period took effect on January 1, 2009, and extended through December 31, 2011. The second three-year control period took effect on January 1, 2012, and extended through December 31, 2014. The third three-year control period took effect on January 1, 2015, and extended through December 31, 2017. The fourth three-year control period took effect on January 1, 2018, and extended through December 31, 2020. The fifth three-year control period took effect on January 1, 2021, and extends through December 31, 2023.[10]
As of April 2021, 97.5 percent of regulated power plants had met their compliance obligations for the fourth control period.[30]
Investment of auction proceeds[edit]
The RGGI states have discretion over how they invest RGGI auction proceeds. They have reinvested proceeds, generated by RGGI auctions in a wide variety of programs. Programs funded through RGGI investment in energy efficiency, renewable energy, direct bill assistance, and greenhouse gas abatement have benefited more than 3.7 million participating households and 17,800 participating businesses. These investments have saved participants money on their energy bills, created jobs, and reduced pollution. In the period 2008 to 2014, programs funded by RGGI investments avoided the use of 2.4 TWh of electricity, 1.6 TWh (5.3×1012 British thermal units) of fossil fuel, and the release of 1.7×106 short tons (1.5×106 tonnes) of carbon dioxide. Over their lifetime, programs funded by RGGI investments estimate to avoid the use of 20.6 TWh of electricity, 22.3 TWh (76.1×1012 British thermal units) of fossil fuel, and the release of 15.4×106 short tons (1.40×107 tonnes) of carbon dioxide.[37]
Energy efficiency represents a large portion of RGGI investments. Ultimately, all electricity consumers, not only those who make upgrades, benefit from energy efficiency programs. For example, investing in efficiency programs—such as weatherizing houses—reduces the amount of electricity used. The decrease in electricity demand actually reduces the overall price of electricity. That means the costs go down for everyone, not just someone who installed new, efficient windows.[38]
Program review[edit]
The RGGI participating states have committed to comprehensive, periodic program reviews to consider program successes, impacts, and design elements.[39] The RGGI states are currently undergoing a 2021 Program Review, which includes technical analyses and regularly scheduled public stakeholder meetings to solicit input.[39] The 2021 Review is expected to be completed in early 2023.[40]
The 2012 and 2016 RGGI Program Reviews completed in 2013 and 2017 resulted in several updates to the program.[9] The 2012 Review led to a 45 percent reduction in the RGGI cap and the introduction of the CCR.[41] The CCR and the reduced cap took effect in 2014. The 2016 Review established the ECR and an additional 30 percent reduction in the RGGI cap from 2020 to 2030.[29] This review also included modifications to the CCR, offset categories, and the minimum reserve price.[29]