RGGI

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort among several U.S. states to reduce greenhouse gas emissions from the power sector through a market-based cap-and-trade program. Established in 2009, RGGI includes states like Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia (until 2023).Under RGGI, participating states set a regional cap on the total amount of CO₂ emissions allowed from power plants. Power plants must hold allowances equal to their CO₂ emissions, with each allowance representing one ton of CO₂. These allowances are auctioned quarterly, and the proceeds are often used to fund energy efficiency and renewable energy programs.The cap is designed to decrease over time, thereby reducing overall emissions. For example, the cap for 2024 is set at 157.18 million CO₂ allowances, with adjustments to account for banked allowances from previous periods. RGGI also includes mechanisms like the Cost Containment Reserve (CCR) and the Emissions Containment Reserve (ECR) to manage allowance prices and ensure cost-effectiveness. The CCR releases additional allowances if prices exceed a certain threshold, while the ECR reduces allowances if prices fall too low. RGGI has led to significant emissions reductions and economic benefits in participating states, including lower electricity prices and increased investment in clean energy.