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With no federal limit on how much carbon dioxide companies can put into the air, many states are taking the lead to hold polluters accountable and to help reduce the impacts of global warming. In the absence of a comprehensive national energy policy, ten northeastern and mid-Atlantic states are working together to shift their energy dollars to cleaner, local, job-creating resources.

Through the Regional Greenhouse Gas Initiative (also known as RGGI, or "Reggie"), these states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont—are already using a market-based system to cap carbon pollution while lowering energy bills for businesses and consumers and creating jobs.

How RGGI Works

RGGI is a "cap-and-invest" program whereby the states set a regional limit on carbon pollution, sell pollution permits, and invest most of the proceeds in energy efficiency and other clean-energy technologies. RGGI's design requires large fossil-fuel power plants to buy those pollution permits, allowing them to emit only a specific amount of carbon dioxide through a quarterly auction. Those profits then generate regional economic benefits through investments in local businesses that provide jobs for residents, weatherize homes, upgrade heating and air-conditioning systems, and provide energy with clean, homegrown American power.

How RGGI Pays Off

Less Pollution: Just as designed, RGGI is a leading factor in bringing carbon pollution in the region down 30 percent. By putting a price on carbon dioxide, RGGI pushes utilities to be more careful about how much of it they emit. And by 2018, RGGI will reduce the number of allowances, and, therefore, the amount of carbon dioxide these power plants can release into our air, by 10 percent.

Regional Economic Gains: RGGI's success isn't just a win for our atmosphere. What's most heartening about the initiative is the way it cuts carbon pollution while creating a host of economic gains for the region, largely for the benefit of consumers, unemployed workers, and small businesses. RGGI generated more than $789 million in its first two years and invested the vast majority of that money into projects that promote energy efficiency, support renewable energy, create clean-energy jobs and train workers to fill them. In fact, 80 percent of the RGGI revenue has gone towards strategic energy programs.

Consumer Savings: Thanks to RGGI, energy costs for participating consumers in the region are an average of 15 to 30 percent lower than they would be without the program, especially at peak times. And RGGI has gone one step further to help lower consumer costs, putting more than $110 million into programs that help low- and middle-income households in the region with their energy bills, both through direct assistance and through programs that weatherize low-income homes. Even consumers who don't participate in efficiency programs benefit because those who do participate reduce demand and reduce the market price of electricity for everyone.

A Model that Works

The product of many years of hard work by a state officials and a wide array of business, consumer and environmental stakeholders, RGGI was launched by former New York Republican Governor Pataki and has enjoyed broad bipartisan support from the start. Modeled on the successful policy developed and implemented by the George H.W. Bush administration to address acid rain in the late 80s and early 90s, capping emissions and using the markets for flexibility has a long history of cost effectively achieving the needed emission reductions.

There's always room for improvement, including more stringent pollution limits. But with proven success, RGGI serves as a powerful model for what a comprehensive national energy policy should do: shift the economy away from reliance on dirty old fuels, volatile energy prices and the antiquated power plants that our grandparents built and move towards clean technologies and innovation that bring jobs, lower energy bills, and can help make US businesses more competitive in today's global markets.

RGGI Success Stories

• In New York, the RGGI-funded Green Jobs-Green New York program provides low-interest loans to low-income homeowners and renters for property upgrades that can help reduce their energy bills and cut their pollution output by 20-35 percent or more. This program can save residents an estimated $1 billion on energy costs annually and create 14,000 new jobs for energy auditors and construction workers.
• One RGGI-funded weatherization program in Massachusetts enables low-income households to save an average of $500 a year on their energy bills by replacing inefficient old furnaces and boilers with economical, high-performance ones.
• At Lakes Region Community College and five other locations across New Hampshire, RGGI is funding new building-analyst courses that establish new certification programs for energy auditors. Shad Lawton and Jamie Myers, two recent graduates, started NHNRRG, a full-service energy auditing and building performance contractor in Lisbon. Their company has already conducted 140 energy audits on 80 building retrofit projects.
• The Clean Energy Solutions Capital Investment Loan/Grant Program in New Jersey provides zero-interest loans and grants for large-scale energy efficiency and renewable energy projects. Twelve projects have received nearly $30 million for combined heat-and-power and solar-electric systems that will meet the annual electricity needs of more than 19,600 typical New Jersey homes. And they’ll save 1.7 million tons of climate change pollution over their lifetimes – the equivalent of taking more than 325,000 cars off the road. RGGI is also helping New Jersey’s offshore wind industry get up and spinning by making financial assistance and tax credits available to businesses involved in projects that are in development, directly creating jobs and attracting new, supporting industries to the state.
• The largest industrial manufacturer in Waldo County, Maine – GAC Chemical in Searsport – received a $314,000 grant to implement a variety of innovative measures to recycle steam from the manufacturing process to heat water, a process projected to save enough fuel to heat 247 homes and enough electricity to power 35 homes each year. This RGGI-funded project will help keep the 60 jobs at GAC in the county, as well as make the company more competitive with others out-of-state.
• In Maryland, some public housing residents in St. Mary’s County saw their heating and cooling costs cut almost in half through the installation of energy-efficient heat pumps.

last revised 3/2/2011