The nine states participating in the Regional Greenhouse Gas Initiative (RGGI) announced Jan. 13 that the 2014 RGGI cap is 91 million tons.
This represents a 45% reduction to the RGGI CO2 cap. To further build on this progress, the RGGI cap will decline 2.5% each year from 2015 to 2020. By 2020, power plant CO2 pollution in the nine RGGI states is projected to be half of 2005 levels, RGGI said in a statement.
The reduction had been proposed about a year ago. RGGI held its last auction Dec. 6 and CO2 allowances attracted a clearing price of $3 per unit.
RGGI also announced Jan. 13 that the first CO2 allowance auction under the new cap, and the twenty-third RGGI auction overall, will take place on March 5.
RGGI has touted its market-based regional system of carbon dioxide allowance trading as a template for the program of greenhouse gas (GHG) reductions that the U.S. Environmental Protection Agency (EPA) is drafting for power plants.
“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,” said Kenneth Kimmell, Commissioner of the Massachusetts Department of Environmental Protection and Chair of the RGGI, Inc. Board of Directors.
In conjunction with the release of the Auction Notice, the RGGI states are announcing the first of the interim adjustments to the RGGI cap. This adjustment will help account for the private bank of allowances held by market participants before the new cap was implemented.
The RGGI states include two interim adjustments to the RGGI cap to account for banked allowances. The first control period interim adjustment for banked allowances is a reduction to the RGGI cap equivalent to the private bank of first control period allowances (2009-2011). The adjustment is applied to each state’s annual CO2 allowance budget for 2014-2020.
The first control period adjustment is 57.4 million allowances and the adjustment to the RGGI cap for 2014 is 8.2 million. The 2014 RGGI adjusted cap for the nine-state region is 82.8 million.
The RGGI states are scheduled to announce the second control period interim adjustment on March 17, 2014. The second adjustment is applied to each state’s annual CO2 allowance budget for 2015-2020.
RGGI is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the power sector.