State Carbon Pricing Policies

Compared to command-and-control regulations, carbon pricing is a market-based mechanism that creates financial incentives to reduce greenhouse gas (GHG) emissions. Ten states that are home to over a quarter of the U.S. population and account for a third of U.S. GDP have active carbon pricing programs and are successfully reducing emissions. Those states are California and the nine Northeast states — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont — that make up the Regional Greenhouse Gas Initiative (RGGI). RGGI was the first mandatory cap-and-trade program in the United States to limit carbon dioxide emissions from the power sector. California’s program which followed was the first multi-sector cap-and-trade program in North America. More recently, two additional states — New Jersey and Virginia — have indicated a willingness to join RGGI. As of 2017, Massachusetts also implemented regulations to establish an additional cap-and-trade program for its power sector that runs in parallel with RGGI but extends out to 2050. Washington state moved forward with a market-based climate policy called the Clean Air Rule but this program is currently suspended while working its way through the court system.

Last updated in September 2018