Five years ago the RGGI states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont -- demonstrated leadership in addressing CO2 pollution and accelerating the region's transition to a clean energy economy by conducting the first ever regional auction for CO2 allowances in the nation. The changes outlined in the Updated Model Rule and Program Review Recommendations Summary build upon RGGI's success and strengthen the program moving forward. The improvements include:
- A reduction of the 2014 regional CO2 budget, "RGGI cap", from 165 million to 91 million tons -- a reduction of 45 percent. The cap would decline 2.5 percent each year from 2015 to 2020.
- Additional adjustments to the RGGI cap from 2014-2020. This will account for the private bank of allowances held by market participants before the new cap is implemented in 2014. From 2014-2020 compliance with the applicable cap will be achieved by use of "new" auctioned allowances and "old" allowances from the private bank.
- Cost containment reserve (CCR) of allowances that creates a fixed additional supply of allowances that are only available for sale if CO2 allowance prices exceed certain price levels ($4 in 2014, $6 in 2015, $8 in 2016, and $10 in 2017, rising by 2.5 percent, to account for inflation, each year thereafter.)
- Updates to the RGGI offsets program, including a new forestry protocol.
- Not reoffering unsold 2012 and 2013 CO2 allowances.
- Requiring regulated entities to acquire and hold allowances equal to at least 50 percent of their emissions in each of the first 2 years of the 3 year compliance period, in addition to demonstrating full compliance at the end of each 3 year compliance period.
- Commitment to identifying and evaluating potential tracking tools for emissions associated with electricity imported into the RGGI region, leading to a workable, practicable, and legal mechanism to address such emissions.
"In the wake of Superstorm Sandy, RGGI is combating extreme weather at its source: climate change. At the same time, it has proved to be an economic engine for participating states: creating thousands of local jobs, generating millions for clean energy development, and lowering energy bills. Now that it will be nearly twice as strong, just imagine what it can do. As the EPA prepares to issue carbon pollution standards for existing power plants nationwide, other states would be wise to look to RGGI as a model. By following this lead, they too can reap similar economic benefits while helping to reduce the turbocharged weather that has been sweeping across the entire country."
Judi Greenwald, Vice President, Technology and Innovation at the Center for Climate and Energy Solutions (C2ES) said, "We applaud today's plan by the nine states in the northeast Regional Greenhouse Gas Initiative to adjust their cap-and-trade program by tightening the cap and increasing compliance flexibility for businesses. Combined, the adjustments would significantly reduce greenhouse gas emissions and increase available funding for clean energy without unduly burdening businesses or consumers. C2ES believes that market-based policies are the most effective and efficient means of reducing greenhouse gas emissions, and we appreciate the continued leadership of the RGGI states."
A long list of green energy companies in the Northeast have enthusiastically supported the RGGI and said it is a boost to the economy while "improving energy security." In letters to their respective state Governors they have said, ". . we encourage you to support and strengthen RGGI going forward."