10 Years of Cap and Trade: A Comprehensive Review of the Regional Greenhouse Gas Initiative

Abstract

The Regional Greenhouse Gas Initiative was the first greenhouse gas-focused cap-and-trade program in the United States. Encompassing nine states in the northeast region of the country, the program covers carbon dioxide emissions from large-scale fossil-based electric power generators. Over the course of the last decade, the Initiative has helped make substantial progress in reducing emissions and changing the generation portfolio in the region, as seen in data from governments, independent system operators, and RGGI itself. It has helped to encourage the reduction of coal and petroleum as sources of electric generation, while encouraging the adoption of renewable generation, and collectively reducing emissions among RGGI states by over 22%, far exceeding the rest of the nation. While RGGI has been a major factor in emissions reduction and the shifts in the region’s generation portfolio, it is not likely the only reason. Other factors, including the cost of energy, Renewable Portfolio Standards, and the potential for emissions leakage, all have had an impact on sources of electric generation and emissions reduction. Ultimately, the Initiative has been successful in its goal of reducing greenhouse gas emissions and improving the region’s generation portfolio. While not without its drawbacks, including the overallocation of carbon allowances, and the potential for leakage, the program does have the potential for long-term improvement by expanding sector coverage and eliminating sources of leakage.