The Regional Greenhouse Gas Initiative (RGGI)
Carbon Dioxide Budget Trading Program
Solar power is free of greenhouse gas emissions.
Funding from RGGI allowance auctions
is helping build New York's clean energy future
with solar and other renewable energy sources.
(Photo credit: NY Dormitory Authority)
In New York and eight other Northeastern and Middle Atlantic states, the Regional Greenhouse Gas Initiative (RGGI) is promoting a clean-energy future with lower greenhouse gas emissions from electric power generation and savings for electricity customers. RGGI is the first mandatory market-based emissions trading program in the U.S. to reduce carbon dioxide (CO2) emissions, and the first anywhere to use the cap-and-invest model for reducing pollution.
RGGI Support of Federal Clean Power Plan
The RGGI states support the EPA's Clean Power Plan to reduce carbon emissions from power plants under the Clean Air Act Section 111(d). The RGGI states' experience shows that regional market-based carbon reduction programs achieve cost-effective reductions while supporting reliability and state economies. Through the Clean Power Plan, other states can reap similar benefits while setting the nation on a clear path toward achieving significant emission reductions from our largest source sector.
How RGGI Works
CO2 emissions cap
Together the nine RGGI states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) set a cap for total emissions of CO2 from electric generation facilities in the region. Each state implements the program through its own regulation, which include emissions caps (or CO2 Budgets) in individual RGGI participating states that are equal to shares of the regionwide cap. The RGGI cap declines over time, gradually tightening emission limits. The states may also make adjustments to the regional cap, as was done in 2014 to lock in progress made to date when emissions declined faster than the cap.
Large electric power plants in the RGGI states are required to hold one tradable emissions allowance for each ton of CO2 they emit. Power plants acquire emission allowances primarily through quarterly auctions that are jointly sponsored by the participating states, or by purchase from other allowance holders.
Benefits from RGGI
RGGI states invest most of the proceeds from the quarterly CO2 emission allowance auctions in consumer benefit programs with emphasis on end-use energy efficiency, renewable energy deployment and greenhouse gas abatement technology development. Since 2005, the RGGI states collectively have seen a decrease in CO2 emissions from RGGI-affected power plants of more than 45%, while providing cleaner air, better health, and economic growth.
Regionwide data are available from the Regional Greenhouse Gas Initiative, Inc. (RGGI, Inc.) website (see link on right).
Benefits in New York
By participating in the market-based RGGI, New York has reduced carbon pollution from RGGI-affected power plants by more than 45 percent since 2005, while maintaining electricity system reliability, reducing electricity bills and reaping economic benefit. In addition, other harmful air pollutants have been decreased more than 90 percent, providing billions of dollars in public health benefits.
A 2011 report issued by the independent Analysis Group (see link on right) estimated benefits from the first three years of program operation. During this period (2009-2001), New York's $327 million in auction proceeds resulted in $326 million in net economic benefits, 4600 job years, and $200 million savings on bills.
The Analysis Group issued a second report in 2015 (see link on right ) covering program operation from 2012-2014, which estimated that during this period an additional $383 million in proceeds to New York yielded $386 million in net economic value, 4463 job years, and $342 million in avoided fossil fuel costs.
Since inception, New York's RGGI proceeds have been translated into energy bill savings of over $1 billion to over 130,000 households and 2,500 businesses. Communities are also strengthening their economies through the $100 million, RGGI-funded Cleaner, Greener Communities program (see link on right).
Public Health Benefits
The transition to cleaner and more efficient energy programs has reduced air pollution from traditional air pollutants including Hg, SO2, NOx, particulate matter, and ozone. These pollutants are associated with asthma attacks, hospital visits, and medical expenses.
According to the Clean Air Task Force (see link on right), since 2005, rates of asthma, bronchitis, heart attacks, hospital visits, and death linked to SO2, NOx, and small particulates from NY power plants were reduced more than 87%, saving up to $4.8 billion.
RGGI funds support the Environmental Justice Community Impact Grant program, which focuses on low-income and minority communities that have historically been burdened by environmental problems.
The EmPower New York program (see link on right), also funded by RGGI, provides no-cost energy efficiency solutions to income-eligible applicants.
Also using RGGI funds, the Green Jobs - Green New York program (see link on right) provides access to free or low-cost energy assessments, installation services, low interest financing, and pathways to training for green-collar careers.
RGGI as a model for action
RGGI requires emissions reductions within a regional framework, consistent with how the electric system operates. Under this market-based approach, electric generators can achieve the most cost-effective emissions reductions possible. States determine compliance unit-by-unit simply by ascertaining that each regulated source holds allowances sufficient to cover its own emissions. The RGGI states have shown that a multi-state, market-based cap-and-invest program can achieve cost-effective reductions in emissions, facilitate the transition to a more efficient power sector, and also create economic benefits and jobs. RGGI offers a successful model for consideration as the nation establishes guidelines for regulation of power plant CO2 emissions under the Clean Power Plan.
More about The Regional Greenhouse Gas Initiative (RGGI):
- How the Carbon Dioxide Budget Trading Program Works - Mechanisms used by the RGGI cap-and-trade system, and how New York State implements them.
- Economic Effects of RGGI - Since inception, the RGGI program has provided billions of dollars of net economic value and saved billions more in avoided fossil fuel costs.
- CO2 Emissions Offset Projects - Regional Greenhouse Gas Initiative (RGGI) CO2 Offset Allowances
- Policy DAR-12: Sustainable Harvested Biomass - Establishes guidelines for determinations by the Department regarding whether particular sources of forest-based woody biomass, and unadulterated wood and wood residues, are considered to be sustainably harvested, for purposes of being considered eligible biomass under the CO2 Budget Trading Program, Part 242