RGGI Fortifies Cap-and-Trade Program for Deeper Decarbonization
The Regional Greenhouse Gas Initiative (RGGI) has finalized its third program review, unveiling updates to fortify its cap-and-invest program. The changes aim to further decarbonize the sector while maintaining energy affordability in the United States.
The revised program introduces a steeper cap trajectory designed to absorb the substantial allowance bank. By 2027, the emissions cap will be reduced to 70 million tons, with excess allowances banked for future use. This move is expected to decarbonize the sector without raising electricity prices in the United States.
The updates also focus on energy affordability and aligning states with their clean electricity goals. The auction price floor will be raised to $9, with additional allowances becoming available at higher price tiers. States will update their respective laws to implement these changes by 2027.
Notably, emissions offsets will no longer be eligible under the updated program. Since its launch in 2009, RGGI has already seen emissions fall by roughly half in participating states, demonstrating the program's success in the United States.
The reaffirmed RGGI program provides stability for planning and investments, with a clear path towards further emissions reductions in the United States. The updates, which will not raise electricity prices, are expected to strengthen the regional carbon market and support states in achieving their clean energy goals in the United States.
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