Regional Greenhouse Gas Initiative Will See Improvements as Part of Third Program Review

The 10 states currently participating in the Regional Greenhouse Gas Initiative (RGGI), which regulates carbon dioxide emissions in the electricity sector of the mid-Atlantic and Northeastern United States, completed their third program review this month with adjustments that strengthen the regional cap-and-invest program. The suggested adjustments to update the program emphasize energy affordability and putting the states on course to achieve state clean electricity goals. Perhaps most importantly, the reaffirmation of the regional carbon market provides stability for planning and investments at a time of great uncertainty for other elements of the economy and energy policy.

The next step in implementing the recommendations from this update will involve state actions to update their respective laws, a process that’s expected to be completed by 2027.

The states in RGGI have seen emissions fall by roughly half since RGGI launched as the first carbon market in North America in 2009. Each state auctions the allowances under its state emissions cap, with auction proceeds directed largely to strategic energy investments and bill relief for ratepayers.

Adjustments to the emissions caps approach, but stop short of, meeting state goals that aim to fully decarbonize the electricity sector by 2035 or 2040, depending on the state. The states are planning a fourth RGGI program review beginning in 2028, at which time they can revisit the potential for deeper emissions reductions. Figure 1 depicts the new cap trajectory as the line labeled “Update to Policy.”