Regional Greenhouse Gas Initiative

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The Regional Greenhouse Gas Initiative (RGGI) is the US's first mandatory regional carbon cap-and-trade market. RGGI is made up of 10 Northeast and Mid-Atlantic states - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont, with New Jersey rejoining the program in January 2020. New Jersey pulled out of the program in 2012.[1] [2]

RGGI caps carbon emissions from 233 power plants in the region, with each state setting its own level.[3] RGGI held its first carbon allowances auction on September 25, 2008.[4]

The market launched on January 1, 2009 and called for the signatory states to stabilize power sector carbon emissions from 2009 to 2014. Thereafter, emissions levels were reduced 2.5 percent per year from 2015 to 2020. States sell nearly all of the allowances through auctions and invest the earnings in various energy efficiency, renewable energy and other programs.[5]

Two US exchanges list futures contracts on RGGI carbon allowances: Intercontinental Exchange and Nodal Exchange.

History

  • RGGI was first conceived in April 2003 by former New York governor George Pataki, who sent out letters to governors from 11 Northeast and Mid-Atlantic states, inviting them to develop a regional greenhouse gas cap-and-trade program.
  • In August 2003, staff representatives were assembled from the nine participating states' environmental agencies, as well as many of the state energy regulatory agencies. This group, called the "RGGI Staff Working Group," drafted an action plan that lays out the process to develop a regional cap-and-trade program covering carbon dioxide emissions from power plants. On Sept. 29, 2003, the environmental commissioners and many of the energy regulatory agency chief executives endorsed the action plan.[6]
  • In December 2005, the governors of seven Northeastern states - Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont - announced the creation of RGGI.[7]
  • In August 2006, the seven states released the final model rule.
  • In January 2007, Massachusetts and Rhode Island joined RGGI.
  • In April 2007, Maryland announces commitment to join RGGI, bringing the number to 10.

In addition, Pennsylvania, Rhode Island, the Eastern Canadian Provinces, and New Brunswick and the District of Columbia are observers in the process.

  • On May 6, 2015, the Carbon Trade Exchange announced the launch of the CTX RGGI Exchange, an exchange platform for buying and selling allowances from the RGGI.[8]
  • After a long process, on June 17, 2019 New Jersey Governor Phil Murphy adopted the rule to rejoin RGGI, starting on January 1, 2020.[9]


References

  1. The Regional Greenhouse Gas Initiative. RGGI.
  2. Phil Murphy reverses Christie and brings Jersey back into climate change pact. NJ.com.
  3. States Aim to Cut Gases by Making Polluters Pay. NY Times.
  4. 10 states holding first mandatory CO2 auction. MarketWatch.
  5. Overview of RGGI CO2 Budget Trading Program. RGGI.
  6. About RGGI. RGGI.
  7. RGGI Timeline. Pew Center on Global Climate Change.
  8. Carbon Trade Exchange to enable 'clean power' allowances. Carbon Trade Exchange.
  9. RGGI States Welcome New Jersey as Its CO2 Regulation Is Finalized. RGGI.