Why RGGI States Should Model a 5 Percent Annual Cap Reduction in the 2016 Program Review

In 2016, the RGGI states are considering the future of their pioneering program to cut carbon pollution in the power sector—specifically, where to set RGGI’s 2021 to 2030 carbon cap. Currently, the states propose to model two scenarios: (1) minimum compliance with EPA’s Clean Power Plan; and (2) a reduction in the cap of 2.5 percent per year. Prudent policy-making would have the states model a wider range of cap scenarios than they have proposed. The purpose of modeling is to develop robust data to inform a reasoned policy decision. Too narrow an analysis could frustrate this goal, leave additional benefits on the table, and possibly hinder the states’ abilities to achieve 2030 and 2050 climate targets most cost-effectively. RGGI is a central pillar of the states’ efforts to address climate change. It is important to get the analysis right. Stakeholders have recommended that the RGGI states model a cap reduction of 5 percent per year between 2021 and 2030 in addition to the states’ initial proposals. This two-pager explains the rationale for modeling a 5 percent scenario.