Excerpt from my current project.
The Regional Greenhouse Gas Initiative
The
RGGI is a compact, originally formed between 10 New
England states, to regulate the greenhouse gas emissions coming
from their power sectors. Since its
inception it has lost one member, New
Jersey, beginning on January 1st, 2012. (Martin,
2010) That is as a result of political
reasons however, not the success or failure of the initiative to achieve its
goals. The initiative regulates 211
power facilities in nine states currently.
Its current members are comprised of Connecticut,
Delaware, Maryland,
Massachusetts, New
Hampshire, New York, Rhode Island, and Vermont.
The
RGGI operates through an emissions allowance auction system. Unsold allowances for the current year as well
as all previous are auctioned in predetermined amounts quarterly. Half of the allotment of total future
emissions allowances for each year for the next four years can be
auctioned. Initial asking prices are
determined “based on the Consumer Price Index, or 80-percent of the current
market price of the particular RGGI allowance vintage being auctioned.” (RGGI,
2008) The first control period lasted
for three years from 2009-2011, after which it was decided in 2012 whether
unsold allowances from previous years would be carried over into the new
market. (RGGI , 2008; RGGI, 2012b) Each
state has its own way of determining the number the allowances it will make
available for auction. Their methods are
defined in state statutes and regulations. (RGGI, 2012a)
The
entirety of the RGGI comprises an emissions market totaling 188 million tons of
CO2. This is ~29% of the size of the
Chicago Climate Exchange (at an initial ~700 million tons of CO2 for Phase II),
making it substantially smaller. What is
more important however, for determining systematic effectiveness at least, is
understanding the percentage of total emissions cut. For the first two 3-year periods the
emissions baseline will remain steady and it will also be the compliance
requirement. After 2014, the baseline
will decrease by 2.5% every Each state
has its own baseline set within the Memorandum of Understanding and its
subsequent amendments, which are as stated: Connecticut, 10,695,036 tons;
Delaware, 7,559,787 tons; Maine, 5,948,902 tons; Maryland, 37,503,983 tons; Massachusetts,
26,660,204 tons; New Hampshire, 8,620,460 tons; New Jersey, 22,892,730 tons;
New York, 64,310,805; Rhode Island, 2,659,239 tons; Vermont, 1,225,830 tons.
Not
every allowance is sold however. Some
were not offered at auction and some were offered but not sold. Of those not offered some were sold at a
fixed price, transferred from state set-aside accounts, and some remained in
set-aside accounts. Of those in
set-aside account a portion were retired.
For each state the portion of allowances remaining each year was
different. The number of allowances
retired, and therefore tons of CO2 mitigated, and their percentage of the
allowance budget per state is as followed: Connecticut, 6,802,914 tons, 21.2%;
Delaware, 6,628,589 tons, 29.2%; Maine, 3,172 tons, 1.8%; Maryland, 6,501,404
tons, 5.8%; Massachusetts, 16,831,266 tons, 21%; New Hampshire, 452 tons, <.01%; New Jersey, 15,706,238 tons, 22.9%;
New York, 43,829,771 tons, 22.7%; Rhode Island, 1,706,721 tons, 21.4%; Vermont,
792,092 tons, 21.5%. On the whole the
RGGI states reduced emissions from their power sectors by an average of 16.76%
for the First Control Period, with New
Hampshire dragging the average down by two percentage
points. (RGGI, 2012b) On the whole
emissions were reduced by 17.5% from their baseline. This compares favorably with the outcome of
the Chicago Climate Exchange’s Phase I.
Figure 1 Figure 2
RGGI
Allowance Allocations Breakdown by Status and State (RGGI, 2012a)
http://goo.gl/YCeEg - Yale Environment 360 article
RGGI Inc. (2008). Design elements regional allowance
auctions under the Regional Greenhouse Gas Initiative. Retrieved from
Regional Greenhouse Gas Initiative website:
http://www.rggi.org/docs/20080317auction_design.pdf
RGGI Inc. (2010). Relative effects of various factors on RGGI
electricity sector CO2 emissions: 2009 compared to 2005. Retrieved from
Regional Greenhouse Gas Initiative website: http://www.rggi.org/docs/Retrospective_Analysis_Draft_White_Paper.pdf
RGGI Inc. (2011). RGGI compliance report. Retrieved
from Regional Greenhouse Gas Initiative website: https://rggi-coats.org/eats/rggi/index.cfm?fuseaction=reportsv2.final_compliance_summary_rpt&clearfuseattribs=true
RGGI Inc. (2012). Allowance allocation. Retrieved
from http://www.rggi.org/market/co2_auctions/allowance_allocation
RGGI Inc. (2012). First control period CO2 allowance
allocation. Retrieved from Regional Greenhouse Gas Initiative website:
http://www.rggi.org/docs/Allowance-Allocation.pdf
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