The Regional Greenhouse Gas Initiative Is a Model for the Nation

Overview
June 12, 2018

The Regional Greenhouse Gas Initiative (also known as RGGI, or “Reggie”) is a pioneering, market-based program to cut carbon pollution from power plants in nine Northeastern and Mid-Atlantic states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. Since its 2009 launch, RGGI has saved consumers hundreds of millions of dollars on energy, with billions more in savings to come; created thousands of new jobs; and improved public health while helping cut carbon pollution from the region’s power plants in half. RGGI’s well-documented success shows how flexible, market-based approaches to cutting power plant pollution benefit everyone. The program functions as a model for other states and regions hoping to reap economic, health, and social benefits in the transition to clean energy that will be key to combating climate change.

In August 2017, the RGGI states agreed to a new round of carbon pollution cuts through 2030 that will continue the program’s many benefits in future years. Currently, two additional states—New Jersey and Virginia—are also in the process of joining the RGGI market. As RGGI expands, it will be critical to ensure that new states commit to ambitious carbon pollution cuts in line with the RGGI program’s existing commitments.

How RGGI Works

RGGI is a “cap and invest” program. Together, the RGGI states set a regional limit on the amount of carbon pollution that power plants are allowed to emit and sell pollution permits up to this limit through quarterly auctions. RGGI’s design requires large fossil-fuel power plants to buy the pollution permits, and the number of permits is lowered each year, so that the region’s power plants contribute progressively fewer emissions to global warming. Auction revenues are used to generate local and regional economic benefits, including through investments in local businesses that provide jobs for residents; weatherize homes; upgrade heating and air-conditioning systems; and provide clean, renewable energy.

How RGGI Pays Off

Less Pollution

Just as designed, RGGI has lowered the region’s carbon emissions. In fact, since the program began, RGGI has helped cut carbon pollution from power plants by more than half. Smart choices by the RGGI states mean that the downward emissions trend will continue, as the pollution cap is slated to decline by 2.5 percent a year through 2020 and 3 percent a year between 2021 and 2030. RGGI has also led to reductions in other dangerous pollutants that pour out of power plant smokestacks alongside carbon pollution. These pollutants—mercurysulfur dioxidenitrogen oxides, and particulate matter—are linked to human health impacts including developmental delays, heart attacks, asthma attacks and other respiratory diseases, and even cancer. Between 2009 and 2014, RGGI created health benefits valued at $5.7 billion.

Regional Economic Gains

The cycle of benefits RGGI creates by cutting carbon pollution isn’t just good for our environment and our health. RGGI has also created 45,000 job-years of work across the region since the program’s launch (a job-year equals one year’s worth of full-time employment for one person) and added $4.3 billion in economic value to the region. Meanwhile, between 2008 and 2016, economic growth in the RGGI states outpaced that of non-RGGI states by 4.3 percent, even as the RGGI states cut power plant carbon pollution faster than the rest of the nation.

Consumer Savings

Thanks to energy efficiency measures and cost-saving renewable energy projects that RGGI helped put in place, consumers in the region have already saved hundreds of millions of dollars on energy costs—$773 million so far—and will eventually save $6.98 billion on energy over the lifetime of these measures. Over RGGI’s first eight years, electricity prices in the region fell by 6.4 percent, even as prices rose by an average of 6.2 percent in other states. Even consumers who don’t participate in energy efficiency programs benefit because participants cut demand overall, which lowers the market price of electricity for everyone.

A Model that Works

Modeled on a successful acid rain control program developed under President George H. W. Bush and launched by a bipartisan group of governors, RGGI has enjoyed broad support throughout its history. With its proven track record, RGGI is a powerful example of how states and regions can jump-start a wide range of economic, social, and health benefits. By moving state and regional economies away from dirty fossil fuels, erratic energy prices, and antiquated power plants and toward clean technologies and innovation, RGGI creates jobs, lowers energy bills, and helps make U.S. businesses more competitive in the global economy.

As other states learn from RGGI’s example, RGGI too continues to build on its success. In late 2017, the RGGI states completed a program review in which they committed to achieve additional carbon pollution cuts through 2030 and to make other program improvements that will capture even more benefits for the region’s consumers, economy, and environment.

RGGI Success Stories

In Connecticut, the state’s public Green Bank and its nationally recognized Commercial Property Assessed Clean Energy (C-PACE) program are important examples of RGGI funding at work. The Green Bank uses RGGI funds to leverage private lending in an effort to bring clean energy to scale. The bank’s C-PACE program helps landlords, businesses, farmers, and nonprofit organizations afford energy upgrades that cut greenhouse gases and improve their bottom lines, and the profits it generates are then reinvested by the Green Bank in more energy- and pollution-saving programs.

In Delaware, the state used its Green for Green program to incentivize builders to construct more energy-efficient homes and buyers to purchase them. Now, even without incentives, those builders are constructing homes that are more energy-efficient than local building codes require.

In Maine, RGGI-supported energy efficiency upgrades are helping Somerset County’s Madison Paper Industries save $2 million a year on energy costs at a mill that employs 240 local residents, helping them retain their jobs in an increasingly competitive international market and building the community’s economic resilience.

In Marylandalmost 2,000 low-income households in and around Baltimore have received energy efficiency upgrades with the help of RGGI and the Civic Works community service corps. The immediate benefits of high-efficiency lighting, low-flow showerheads, and pipe insulation are easy to see on these Marylanders’ energy bills; the upgrades will likely save participants an estimated $1.5 million over the measures’ lifetimes. By enlisting Civic Works in its efforts, the program also helps train low-income young people in the job skills they need to find meaningful and well-paying work in the growing field of energy efficiency.

In Gloucester, Massachusetts, RGGI support available through the state’s Green Communities program has helped shift taxpayer spending from energy waste to education and saved money on street lighting. With RGGI’s help, Gloucester’s high school and O’Maley Middle School benefit from new, automated building energy controls, saving money that can be invested in education. Meanwhile, LED streetlights provide better illumination than the lighting they replaced, at a fraction of the cost.

The White Mountain Regional School District in northern New Hampshire is saving 10 percent annually on electricity at one of its schools, thanks to RGGI, which helped the district install new, energy-efficient lights.

In New York’s Big Apple, RGGI proceeds have helped nonprofit organizations, houses of worship, small businesses, and apartment buildings in low-income neighborhoods undertake energy efficiency upgrades that save them as much as 70 percent on their utility bills—and 70 percent on their carbon emissions, too.

New, efficient LED lighting and a web-based energy management system that Rhode Island RGGI funds helped finance will enable the South County YMCA in Wakefield to save more than $18,000 a year on its energy costs. It’s just one of many nonprofits throughout the state that benefit from a RGGI-supported program enabling them to complete energy efficiency projects they otherwise couldn’t afford and to cut the carbon pollution that endangers the safety of the communities they serve.

In Mendon, Vermont, a local homeowner is saving more than $1,000 a year on her heating and cooling bills, thanks to an Efficiency Vermont weatherization program that is just one example of RGGI funding at work. All told, RGGI funding for heating and cooling efficiency in the Green Mountain State through 2014 (the latest data available) was estimated to have saved households and businesses about $115 million on their energy bills and cut carbon pollution by 105,000 short tons of carbon dioxide.