Regional Greenhouse Gas Initiative

Published Jul 17, 2008 Updated Jan 18, 2012

The Regional Greenhouse Gas Initiative (RGGI) is a market-based “cap and trade” program established in 2008 by ten northeast and mid-Atlantic states (Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Delaware, and Maryland) to reduce global warming emissions from power plants. RGGI is a groundbreaking, first-in-the-nation partnership that demonstrates the effectiveness of carefully designed and implemented market-based climate programs.

How It Works

RGGI is known as a “cap and trade” system because the overall limit on global warming emissions (the “cap”) is translated into a fixed number of permits, known as allowances. Each allowance authorizes a power plant to emit one ton of carbon dioxide (CO2), the dominant global warming pollutant. The creation and distribution of these allowances creates a market, in which allowances can be bought and sold (the “trade”).

RGGI is designed to stabilize the overall level of CO2 emissions allowed from power plants in the region at 2005 levels starting in 2009 through 2014, followed by a 10 percent reduction in emissions by 2019. Careful design of emissions tracking and market oversight have created an administratively streamlined program free of collusion and manipulation of emission allowance markets

RGGI is a Proven Success

RGGI’s successful track record ranges from demonstrating the viability of a market-based policy to address power plant global warming emissions, to raising hundreds of millions of dollars for investments in energy efficiency, clean energy, and other consumer-benefit programs. RGGI’s proven successes include:

  • Pollution from power plants has decreased because RGGI states are using less energy and getting more power from renewable energy and less power from oil and coal;
  • By 2011, RGGI raised over $440 million for energy efficiency programs, generating $1.3 billion in savings for RGGI region consumers;
  • Overall, RGGI has increased output by $1.6 billion, creating 16,000 jobs in the regional economy.

All of the participating states have committed to spending the revenue they receive from the auctions on programs to help homeowners and businesses improve energy efficiency and increase their use of clean energy technologies like solar and wind. Investment in energy efficiency and clean energy technology reduces energy bills, creates jobs and is essential to decreasing our dependence on fossil fuels—which is at the root of global warming.

Polluters Attack

Despite its proven success, fossil fuel interests and their allies continue to launch attacks on RGGI, filing lawsuits to try to prevent participation and attempting to falsely label the program as a tax.

RGGI continues to be targeted by critics because of its potential to help build momentum for a national cap-and-trade climate program, which would reduce our national dependence on polluting, non-renewable sources such as coal and oil, and require improvements to outdated power plant facilities in order to reduce the dangerous emissions which threaten our health and our economy.

RGGI is an Important Step in Tackling Emissions

RGGI is an integral part of the northeast and mid-Atlantic states’ portfolio of climate and clean energy programs, providing effective market-based signals to reduce greenhouse gas pollution and spur energy innovation. While the emissions reductions under RGGI are modest, the plan represents an important 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 global warming pollution.

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