The Regional Greenhouse Gas Initiative (RGGI) was the first mandatory cap-and-trade program in the United States to limit carbon dioxide (CO2) from the power sector. The participating states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.
RGGI was established in 2005 and administered its first auction of CO2 emissions allowances in 2008. By 2020, the cap-and-trade program is expected to help the states reduce annual power-sector CO2 emissions 45 below 2005 levels. The states have set a goal of reducing emissions an additional 30 percent by 2030.
RGGI requires fossil fuel power plants with capacity greater than 25 megawatts to obtain an allowance for each ton of CO2 emitted annually. Power plants within the region may comply by purchasing allowances from quarterly auctions, other generators within the region, or offset projects. RGGI states have seen more than $3 billion in economic benefits from the Northeast’s cap-and-trade program.
Program Development and Model Rule
In 2005, the governors of Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont signed a Memorandum of Understanding (MOU) to reduce CO2 emissions within the northeastern and mid-Atlantic region. In 2007, RGGI was expanded to include Maryland, Massachusetts, and Rhode Island. The ten signatory states agreed to be jointly responsible for carrying out the provisions featured in the MOU.