A healthy economy, healthy people and a healthy environment go together. And today nine northeast states are the cutting edge with a groundbreaking new initiative to ensure a healthy future for us all.

The plan offers a new, market-based strategy that will modernize the electric power system using clean, efficient technology to reduce the heat-trapping pollution responsible for global warming. Their approach will reward innovative business performance, create new jobs, and help solve one of our most challenging economic and environmental challenges.

Participating states are Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont. Maryland, the District of Columbia, Pennsylvania, and five Canadian provinces are close observers in the process.

Known among insiders as the "Regional Greenhouse Gas Initiative," the plan will establish limits on carbon dioxide emissions and create a trading system allowing companies that beat the standards to sell their extra credits to other firms, opening up a win-win opportunity and lowering overall compliance costs.

The initiative will help consumers and businesses operate more efficiently and cost effectively, stimulate regional economic development and drive investment in new, clean energy technologies. It will also help companies in the region earn a competitive advantage as federal global warming pollution limits come closer to reality.

Each participating state will have its own emissions limit, and will regulate only the power plants located within its boundaries. The coalition will likely first agree on an overall regional pollution limit, and then assign a portion of that amount to each state. Interstate trading will occur when a state agrees to recognize allowances issued by other states.

The program would allow states outside of the Northeast to participate as well, and could be extended to cover not just power plants but all stationary global warming pollution sources, and additional greenhouse gases such as methane and sulfur dioxide.

The states involved in the initiative expect to jointly develop a "model rule" by June 2005, which could then be implemented by each state. So far, their work has focused on:

  • identifying modeling tools to determine the potential impacts of an emissions cap on electricity prices and the economy generally;

  • launching a broad stakeholder working group;
  • collecting data on emissions;
  • launching a website (;
  • and identifying and discussing key policy issues.

NRDC is working with participating states to ensure the effectiveness of the rule, which will serve as an important model for future federal programs and will lay the groundwork for a federal initiative.