Regional Greenhouse Gas Initiative (RGGI)
On December 20, 2005, seven states, including Delaware, announced an agreement to implement the Regional Greenhouse Gas Initiative (RGGI, pronounced “Reggie”).
The RGGI is a cooperative effort by states in our region to reduce carbon dioxide (CO2) emissions—an important step in helping reduce human-induced climate change. In fact, RGGI will be the first mandatory cap-and-trade program in the U.S. aimed at reducing greenhouse gas emissions. The effort will initially be aimed at reducing CO2 emissions from power plants in participating states, while maintaining energy affordability and reliability. Once up and running, states may consider expanding the program to include other sources of emissions, not just power plants, and greenhouse gases other than CO2. Currently, participating states include: Delaware, Maine, New Jersey, Vermont, Maryland, New York, Connecticut, Rhode Island, Massachusetts, and New Hampshire.
Regulation 1147 establishes Delaware's portion of a multi-state carbon dioxide (CO2) cap-and trade program. For more information on Delaware’s implementation of the RGGI program click here.
RGGI states are busy developing a regional strategy for controlling greenhouse gas (GHG) emissions. A regional strategy will be more effective in controlling emissions, which are not bound by state or national borders. To achieve this goal, the program will implement a multi-state cap-and-trade program with a market-based emissions trading system. The cap-and-trade permit program will cap (limit) the total amount of GHG emissions each year in order to meet a specific environmental target. Each state is allocated a certain amount of GHG emissions (called “permits” or “allowances”) based on historical emissions and negotiation among the signatory states. States then will sell (auction) their allowances directly to electric generators in a competitively wholesale market process.
Participating states are currently discussing the design of a regional auction platform and the regulatory provisions needed to implement the auction process. Under a “trade” permit system, companies that receive an allocation of emissions through the auction process are then allowed to trade emissions permits with other companies.
The RGGI Memorandum of Understanding (MOU) requires participating states to stabilize CO2 emissions from power plants at a level roughly equal to current emissions for the first six years of the program (2009-2014). Then, between 2015 and 2018, CO2 emissions will be reduced by 2.5% per year. This approach will result in a 2018 emissions profile that is 10% smaller than the initial 2009 annual emissions budget. The phased approach is intended to provide market signals and regulatory certainty so that electricity generators begin investing in lower-carbon fuel sources throughout the region, without creating significant wholesale or retail electricity rate impacts.
The regional emissions budget for each year can be seen below. For more information on RGGI, click here for the official website.
Year CO2 Emissions Budget (short tons)