The first mandatory cap-and-trade program was established in 2005 with the Regional Greenhouse Gas Initiative (RGGI) in the Northeast established by governors of 7 states: Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont. The membership grew to 10 with the addition of Massachusetts, Maryland and Rhode Island in 2007.
There are several regional initiatives or accords programs to address GHG emissions involving more than 30 states as active participants or observers. Observer membership allows the state to remain informed about the initiative but it is not required to comply with the initiative. States may move from observer to participant status after establishing state policies.
RGGI is the only cap-and-trade program operating in the U.S. It requires member states to cap carbon dioxide emissions from power plants, auction emission allowances, and then proceeds are invested in building a clean energy economy.
RGGI has already shown that the economic skies don’t fall down as climate deniers claimed that cap-and-trade programs would be bad for our economy. Since its first online auction in 2008, RGGI has raised more than $861 million by auctioning these allowances. Each state decides how to invest its share of allowance proceeds, but generally the states have decided to improve energy efficiency, focus on renewable energy technologies and provide energy bill assistance to low-income ratepayers.
RGGI has not only reduced GHG emissions but also “created new jobs and lowered state energy bills.” Last year, Maine Gov. John Baldacci credited RGGI for creating 10,000 jobs. RGGI proceeds also contributed to green capital investments with positive economic and job creation impacts in member states of Maine, New Hampshire and Massachusetts. As for ratepayers: ”On a dollar-for-dollar basis, RGGI is a winner across the board, with ratepayers benefiting from investments in energy efficiency and other clean technology programs that provide $3 to $4 in savings for every $1 invested, thereby sparking local economies.”
A recent report showed that 80% of the hundreds of millions raised by auctioning carbon credits has “gone back to ratepayers and businesses for renewable energy projects and energy efficiency upgrades. As we reported last week, three states – Delaware, Maine and New Hampshire – have attempted to pull out of RGGI. But after evaluating the economic benefits, all three states decided to remain in the program.”