Nine Northeastern and Mid-Atlantic states that have the first U.S. market-based compact to cut greenhouse gas emissions from power plants, have decided to reduce the limit on emissions by 30 percent between 2020 and 2030.
The nine states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont – participate in a CO2 cap and trade market which began in 2009, known as the Regional Greenhouse Gas Initiative, RGGI, (say Reggie).
RGGI establishes a regional cap on the amount of CO2 pollution that fossil-fueled power plants 25MW and larger 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 of the nine RGGI states together create a regional market for CO2 allowances.
If approved by stakeholders, the new limit, proposed on August 23, means that a regional cap of 75,147,784 tons of CO2 in 2021, will decline by 2.275 million tons of CO2 every year thereafter, resulting in a total 30 percent reduction in the regional cap from 2020 to 2030.
That is a little higher than the current agreement to cut emissions by 2.5 percent annually.
The RGGI states will seek stakeholder comments on the draft program elements in a public meeting to be held on September 25 in Baltimore.
Through RGGI’s implementation and through complementary state policies, the RGGI states have shown that economic benefits, consumer savings, public health improvements, and greenhouse gas emissions reductions can go hand-in-hand.
The 2030 cap will be more than 65 percent lower than RGGI’s 2009 starting cap, continuing the participating states’ progress in reducing emissions.
Studies, such as a recent independent report by Abt Associates, have found that RGGI has generated public health benefits which have saved hundreds of lives, prevented thousands of asthma attacks, and saved $5.7 billion in health-related
economic costs.
RGGI’s auctioning of allowances has especially been praised as an innovative program design element. These quarterly regional auctions have generated more than $2.7 billion in proceeds for reinvestment in strategic programs to benefit consumers and build a stronger and cleaner energy system in the RGGI states.
Independent reports by the Analysis Group have found that RGGI is generating billions of dollars in net economic benefit and tens of thousands of job years.
Investments funded through RGGI proceeds improve the cost-effectiveness and reliability of the grid by reducing peak demand, which in turn lowers wholesale power prices and helps avoid the need for costly infrastructure investments, RGGI states.