Regional Greenhouse Gas Initiative
SOURCE: RGGI, Inc. and EPA
Emissions of CO2 from power plants in the Regional Greenhouse Gas Initiative (RGGI) have dropped since the start of the program, and new RGGI reforms ensure that climate pollution will continue to decline in the future.
How RGGI Works
Under RGGI, power plants purchase allowances (permits to emit) for each ton of CO2 that they dispose of in the atmosphere. The quantity of allowances declines over time, increasing the price of allowances and incentive to reduce emissions. Revenue from the sale of allowances is reinvested in energy efficiency, renewable energy, and other state programs.1
Performance to Date
Since states agreed to a carbon pollution limit (the “cap”) in 2005, emissions have dropped precipitously, falling 45% below the cap in 2012. This decline is due to a number of factors: decreasing electricity generation from carbon-intensive fuel oil and coal; increasing generation from low cost natural gas and renewables; and, improvements in energy efficiency. These trends created an unexpected problem. States had far exceeded initial 10% reduction target, but there was a surplus of allowances, so prices were too low (below $2/ton) to incent further pollution reductions.
In order to lock in emissions reductions and ensure the continuing effectiveness of the program, states have agreed to reduce the emissions cap from 165 million tons to 91 million tons. Reducing the cap to 2012 emissions levels accounts for reductions in pollution that have occurred as natural gas generation has increased and investments in renewables and efficiency have continued to grow. Furthermore, the lower cap will ensure that there is an incentive for plants to continue cutting emissions.