Regional Greenhouse Gas Initiative

(RGGI) Carbon Dioxide Cap and Trade Program

The Regional Greenhouse Gas Initiative (RGGI) is a ten-state agreement to reduce greenhouse gas emissions from power plants by means of a cap and trade system. Carbon dioxide, or CO₂, is the principal greenhouse gas emitted by electric power generation and any other activity involving fossil fuel combustion.

Under the RGGI agreement, the governors of ten Northeastern and Mid-Atlantic States have committed to cap the amount of CO₂ that power plants are allowed to emit. The states are currently establishing regulations that will hold the allowed level of CO₂ emissions constant through 2014, and then gradually reduce it.

The rules will also require power plants to hold enough CO₂ allowances to cover their emissions. The ten states have cooperatively developed an auction system through which power plants can obtain allowances. The first RGGI auction is scheduled for September 25, 2008.

Greenhouse Gases and Climate Change

As our feet can easily tell when we stand on a sunny beach, solar energy absorbed by the earth's surface radiates back as heat (infrared radiation). CO₂ and other greenhouse gases naturally present in the atmosphere trap this heat, maintaining the earth's average temperature at about 50 degrees Fahrenheit higher than it would be if the atmosphere had no greenhouse gases. This natural greenhouse effect has regulated the earth's climate system for millions of years.

For more than a century, people have been adding large amounts of CO₂and other greenhouse gases to the atmosphere by burning fossil fuels to generate power, heat homes and buildings, manufacture goods, and use mechanical transportation. These additional greenhouse gases intensify the natural greenhouse effect, and the resulting warmer temperatures are changing the earth's climate.

Overwhelming scientific evidence suggests that the warming climate poses a serious threat to New York's environmental resources and public health. Climate changes will affect air quality, water quality, fisheries, drinking water supplies, wetlands, forests, wildlife, and agriculture. Flooding from severe weather events and rising sea levels can damage communities and infrastructure in floodplains and along coastlines. Tropical diseases can appear as far north as New York State.

The RGGI Strategy

The burning of fossil fuels for electric generation is a large contributor of CO₂ to the atmosphere. In New York, for instance, electric power plants pump out approximately one-quarter of all CO₂ emissions. This means that reducing the amount of CO₂ emitted by power plants is a necessary part of any solution to climate change.

By providing funds for renewable energy and other greenhouse gas reduction programs, RGGI also will help in other ways to counter the threat of a warming climate and will produce important public health, environmental and economic benefits. These benefits include improved local air quality, preservation of forests, better agricultural manure handling practices (leading to better water and air quality in rural areas), and a more robust, diverse, clean and secure energy supply.

The RGGI participating states are using a market-based cap-and-trade approach to reduce emissions of greenhouse gases. This website provides details on the cap and trade strategy, which includes:

A multi-state CO₂ emissions budget (cap) that will decrease gradually until it is 10 percent lower than at the start; by 2019, emissions are estimated to be 16 percent lower than they would be if the power plants had continued emitting on a business-as-usual basis
A market-based emissions trading system

Support for low-carbon-intensity solutions, including energy efficiency and clean renewable energy (such as solar and wind power)

RGGI in New York

The RGGI states have negotiated a regional CO₂ budget of approximately 188 million tons, and have apportioned it among themselves. New York's initial CO₂ budget will be approximately 64 million tons (before the 10 percent reduction is made). The states are currently developing rules to implement the CO₂ Budget Trading Program.

Responsibility for implementing RGGI will be shared by three departments of New York State government: the Department of Public Service, the Department of Environmental Conservation (DEC) and the Energy Research and Development Authority (NYSERDA). DEC and NYSERDA are currently engaged in rulemaking to implement RGGI.

DEC is establishing New York's CO₂ Budget Trading Program through a new rule (6 NYCRR Part 242) and revisions to an existing rule (6 NYCRR Part 200, General Provisions). The New York State Energy Research and Development Authority (NYSERDA) will administer the auction process by which the state will sell CO₂ allowances to the power plants, through a new rule (21 NYCRR Part 507 - CO₂ Allowance Auction Program). Under this rule, proceeds from the sale of the allowances will fund projects and programs for energy efficiency and clean energy technology. The regulations have been subject to public review in two comment periods, the latest of which ended on June 23, 2008.

Stakeholder involvement was crucial to RGGI's success in developing its model rule, which served as a template for all the RGGI states' regulations. New York's stakeholder group, which included energy industry representatives and non-governmental organizations, met 14 times between 2003 and 2007. Public comment was solicited and reviewed on a variety of written documents, including draft reports of the RGGI working groups and the model cap-and-trade rule. New York also invited comments on an advance draft of its revised CO₂ Budget Trading Program regulations.

More about Regional Greenhouse Gas Initiative:

How RGGI's Cap-and-Trade System Works - Mechanisms used by the RGGI cap-and-trade system, and how New York State will implement them
Current RGGI Stakeholder Meeting Announcement and Agenda - The Regional Greenhouse Gas Initiative, or RGGI, is a cooperative effort by Northeastern and Mid-Atlantic states to reduce carbon dioxide emissions.
New York's Greenhouse Gas Stakeholder Process - The Regional Greenhouse Gas Initiative, or RGGI, is a cooperative effort by Northeastern and Mid-Atlantic states to reduce carbon dioxide emissions
Economic Effects of RGGI - The RGGI program is expected to have a small effect on electric power rates for consumers.