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What is RGGI?

Updated: Nov 3, 2023

States included within RGGI

The Regional Greenhouse Gas Initiative (RGGI) is a multi-state market-based program to cap and reduce Carbon Dioxide (CO2) emissions. Scientists believe that CO2 emissions are a major contributor of global warming, and the power sector is the leading source of greenhouse gas emissions in the Northeastern and Mid-Atlantic states. RGGI is commonly referred as the Regional Cap and Invest program.

RGGI was launched in 2009 to reduce greenhouse gas emissions from the power sector while generating economic growth. The cap and reduction in emissions is achieved by setting a cap or limit on CO2 emissions from fossil fuel power plants that are in the participating states. These regulated power plants must purchase one RGGI CO2 allowance for every short ton of CO2 they emit. The RGGI states receive the proceeds from selling the allowances.

The current participating states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, Virginia, and Pennsylvania. However, on June 7, 2023, a regulation repealing Virginia’s CO2 Budget Trading Program was approved. Pennsylvania recently returned to the program, with a goal of 50% reduction of greenhouse gas emissions by 2050, despite ongoing litigation that prevents PA from fully participating in the program.

The states collectively develop the RGGI Model Rule, which is the template that shapes the individual State CO2 Budget Trading program. Each CO2 Budget trading program limits emissions of CO2 from electric power plants, issues CO2 allowance, and establishes participation in regional CO2 allowance auctions. RGGI requires fossil fuel power plants with a capacity greater than 25 megawatts to obtain an allowance for each ton of CO2 emitted annually. However, in NY power plants that are 15 megawatts or greater are regulated under RGGI.

Power plants can use a CO2 allowance issued by any participating state to demonstrate compliance. They can purchase allowances from quarterly auctions, other generators within RGGI, or through projects that offset CO2 emissions. The participating State uses the proceeds from the CO2 auction to invest in programs to help further reduce CO2 and other greenhouse gas pollutants. On September 6th New Jersey held its 3rd quarterly RGGI auction and allocated $48.4 million for a total of $131 Million in 2023 for clean energy and greenhouse gas reduction strategies in the State of NJ.

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