Dive Brief:
- The Regional Greenhouse Gas Initiative, a cap-and-trade program covering nine Northeast and Mid-Atlantic states, has cut its carbon dioxide emissions cap by 45% to 91 million a pounds a year.
- Among various changes to the program, the cap will fall by 2.5% a year for five years starting in 2015.
- RGGI participants tout the program as a national model for cutting carbon emissions. “RGGI is a cost-effective and flexible program that can serve as a national model for dramatically reducing carbon pollution for other states throughout the nation,” Kenneth Kimmell, Massachusetts Department of Environmental Protection Commissioner and RGGI board chair, said.
Dive Insight:
The 45% cut to the cap is not as severe as it sounds. Emissions levels were already under the previous cap because of the sluggish economy and increased use of natural gas-fired power plants in the region. Even so, cutting the cap should increase compliance costs. Along with the lowered cap, RGGI created a “cost containment reserve” of 5 million allowances that can be tapped if the price of the allowances is more than $4. The reserve is designed to keep prices from rising too fast.