Regional Greenhouse Gas Initiative Funding
Fixing pollution and climate change problems caused by fossil fuels requires collective action.
The Regional Greenhouse Gas Initiative (RGGI) is a cooperative, market-based effort dating back to 2003. It focuses on lowering greenhouse gas emissions from electric power plants, promoting clean energy, and creating savings for electricity customers.
RGGI has two missions:
- To limit emissions of CO2 pollution from fossil fuel-fired power plants with capacities greater than 25 megawatts
- In order to spur investments in energy efficiency and clean energy
The nine northeastern and Mid-Atlantic States that comprise RGGI today agree to a declining cap on the combined CO2 emissions from all covered power plants without limiting emissions from any one plant. About 170 power plants participate in the cap-and-trade program. The RGGI states agreed in August 2017 to reduce emissions 30% further by 2030.
Regulated power plants must purchase and surrender one permit, called an allowance, for each ton of CO2 they emit. Each year, the states distribute CO2 allowances equal to that year’s cap in regional auctions. As the cap declines, the price of the permit rises, giving utilities an incentive to find a cheaper way to reduce emissions.
Revenues from each auction are distributed back to the states. Since 2009, about $2.7 million has been raised and invested in renewables and energy efficiency. Similar cap-and-trade systems are used to control nitrogen oxides and sulfur dioxide pollution from power plants.
Massachusetts joined RGGI in 2007 and about 30 MA power plants participate. Since January 2009, Massachusetts has received over $427 million in auction proceeds and invests 80% of its revenues in energy efficiency measures.
Massachusetts’s power plant CO2 emissions have declined more than 45% since 2005 as a result of RGGI, complimentary clean energy programs, and other market driven changes. The investments save consumers money, create local jobs, and the decreasing greenhouse gas emissions can also decrease other air pollutants that have a direct impact on health.
Sources: