Tradable Permits Examples: Regional Greenhouse Gas Initiative (RGGI)

  • strict warning: Non-static method view::load() should not be called statically in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/views.module on line 906.
  • strict warning: Declaration of views_handler_argument::init() should be compatible with views_handler::init(&$view, $options) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_argument.inc on line 744.
  • strict warning: Declaration of views_plugin_style_default::options() should be compatible with views_object::options() in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/plugins/views_plugin_style_default.inc on line 24.
  • strict warning: Declaration of views_plugin_row::options_validate() should be compatible with views_plugin::options_validate(&$form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/plugins/views_plugin_row.inc on line 134.
  • strict warning: Declaration of views_plugin_row::options_submit() should be compatible with views_plugin::options_submit(&$form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/plugins/views_plugin_row.inc on line 134.
  • strict warning: Non-static method view::load() should not be called statically in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/views.module on line 906.
  • strict warning: Non-static method view::load() should not be called statically in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/views.module on line 906.
  • strict warning: Non-static method view::load() should not be called statically in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/views.module on line 906.
  • strict warning: Declaration of views_handler_filter::options_validate() should be compatible with views_handler::options_validate($form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_filter.inc on line 607.
  • strict warning: Declaration of views_handler_filter::options_submit() should be compatible with views_handler::options_submit($form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_filter.inc on line 607.
  • strict warning: Declaration of views_handler_filter_boolean_operator::value_validate() should be compatible with views_handler_filter::value_validate($form, &$form_state) in /hermes/bosnaweb19a/b696/ipg.chicagoclimateonline/sites/all/modules/views/handlers/views_handler_filter_boolean_operator.inc on line 159.

Overview

The Regional Greenhouse Gas Initiative (RGGI) is a market-based CO2 emissions reduction program in the northeastern United States and Canada. It regulates fossil fuel-fired electric power generators with a capacity of 25 megawatts or greater.

Each participating state designs its own CO2 Budget Trading Program, setting rules and regulations based on the RGGI Model Rule. However, a CO2 allowance issued by any state’s program can be used in any other state, which unites the individual state CO2 trading markets into a single regional market.

Members of RGGI

As of 2010, RGGI’s ten participating states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. There are also two non-participating observers in Canada (Ontario, New Brunswick) and two in the United States (Pennsylvania, Quebec).

Design

One permit or “allowance” corresponds to one ton of CO2. At the end of each three-year control period, each regulated source must hold allowances equal to its CO2 emissions over that period. During the first two control periods, 2009-2011 and 2012-2014, emissions allowances are capped at 188,076,976 tons per year (which is close to 2005 emissions levels). After that, the cap decreases by 2.5% each year, reaching 10% below initial levels by 2018.

Most of each year’s allowances (e.g. 86.92% of the 2009 allowances) are distributed by states in quarterly auctions. Others are sold by states at a fixed price. The rest of that year’s allowances are distributed from state set-aside accounts, or put in state set-aside accounts for future distribution. Also, “offset allowances” can be awarded for certain projects that reduce or sequester carbon dioxide (CO2), methane (CH4), or sulfur hexafluoride (SF6).

States are investing the proceeds from the sale of CO2 allowances in consumer benefit programs: Energy efficiency, renewable energy and energy bill payment assistance.

Early Results

Total CO2 emissions from RGGI power plants in 2009 decreased to 123,718,594 tons (9% below 2008 levels and 34% below the regional cap of 188,076,976 tons). This is not necessarily due to RGGI, but rather to other concurrent influences: cheap natural gas, increased non-emitting generation, more efficient use of electricity, and (to a lesser extent) economic trends and mild summer weather.