Yesterday, Massachusetts and the eight other New England and Mid-Atlantic states that participate in the Regional Greenhouse Gas Initiative announced a proposed plan for the continued implementation of RGGI (the region’s cap-and-trade program) between the years 2020 and 2030. The plan calls for an additional reduction of GHGs by 30% by 2030, beyond the RGGI 2020 levels. Emissions would be capped at about 75 million tons in 2021, declining by about 2.25 million tons every year until 2030. The rate of reduction (approximately 3% per year) is more aggressive than that in place during the first period (approximately 2.5%). (More detail on the program elements can be found here.)
The plan also calls for an increase in the price cap for allowances calls and the implementation of an Emissions Containment Reserve (ECR), designed to address lower than expected allowance prices. Under the new mechanism, for states that chose to implement the ECR, if the RGGI auction price falls below a predetermined trigger price, then some portion of the allowances would not be sold. This market correction would reduce the supply of emissions allowances to reflect the reduced demand demonstrated by the low market price. The goal of the ECR is to reduce price volatility and ensure that the program continues to serve its goal of reducing total emissions. The think-tank Resources For the Future proposed the ECR mechanism for RGGI, described in detail in their recently published report.
Sources are also reporting that New Jersey may return to RGGI after dropping out under Governor Chris Christie (both candidates running for Governor Christie’s term-limited seat have pledged to rejoin) and that Virginia may sign on as well. While the world certainly needs Paris, the commitments of the RGGI states will have reduced the emissions cap 65 percent from 2009 levels, far ahead of goals set in both the Clean Power Plan and the Paris Climate Accord.