Seven Northeast States Set Rules for Greenhouse Gas Reductions

August 23, 2006

The seven Northeast states participating in the Regional Greenhouse Gas Initiative (RGGI)—an effort to set a cap-and-trade system for greenhouse gas emissions—released a model rule for the program on August 15th. The model rule will form the basis for individual state regulatory or statutory proposals to implement the program. Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont are participating in the program, while recent legislation in Maryland requires the state to join RGGI by June 2007.

Under RGGI (pronounced "Reggie"), the seven states intend to launch a regional cap-and-trade system that utilizes emissions credits or allowances to limit the total amount of carbon dioxide emissions. Beginning in 2009, emissions of carbon dioxide from power plants in the region would be capped at current levels of 121 million tons annually. The cap remains at the same level until 2015, after which the states would then begin reducing emissions over a four-year period to achieve a 10 percent reduction by 2019. Compared to the emissions increases the region would see from power plants without the program, RGGI will result in an approximately 35 percent reduction by 2020.

At least a quarter of each state's emissions allowances will be dedicated to strategic energy or consumer benefit purposes, such as energy efficiency or clean energy technologies. If a power plant buys these allowances, the funds will support beneficial energy programs. RGGI can also benefit projects in other states, since power plants can meet some of their emissions cuts by investing in non-electricity projects that cut greenhouse gases anywhere in the country. Such projects might include landfill gas recovery efforts and energy efficiency programs for natural gas users. Assuming all the states take the necessary actions to adopt the program, RGGI will take effect in 2009. See the RGGI press release (PDF 48 KB) and Web site. Download Adobe Reader.