Regional Greenhouse Gas Initiative (RGGI)

Last updated: 26 July 2019

The Regional Greenhouse Gas Initiative (RGGI) - the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions - was established in December 2005 by the governors of seven Northeastern and Mid-Atlantic states: Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont. Massachusetts, Rhode Island, and Maryland joined RGGI in 2007, bringing the number of participating states to ten.


RGGI sets a cap on emissions of carbon dioxide (CO2) from fossil fuel-fired power plants with a capacity of 25 MW or higher, and allows sources to trade emissions allowances. The RGGI GHG emissions cap, state emissions caps and allowance distribution, and auction design were developed collaboratively between the RGGI states. RGGI is composed of individual CO2 Budget Trading Programs in each of the ten participating states. These ten programmes are implemented through state regulations, based on a RGGI Model Rule, and are linked through CO2 allowance reciprocity. Regulated power plants will be able to use a CO2 allowance issued by any of the ten participating states to demonstrate compliance with the state programme governing their facility. Taken together, the ten individual state programmes will function as a single regional compliance market for carbon emissions.


The programme will begin by capping emissions at current levels in 2009 and then reducing emissions 10% by 2018.  The compliance period begins on 1 January 2009, at which time allowances will become tradable as power plants adjust their GHG emissions levels. The program will include 233 fossil fuel-fired power stations and factories. Power generators must hold allowances covering their CO2 emissions; each allowance allows the emission of one short ton of carbon dioxide emissions. These allowances are to be auctioned, and the proceeds used by the states to support renewable energy, energy efficiency and other low carbon intensity power solutions.  Before the start of the compliance period, pre-compliance emissions allowance auctions are to be held for the 2009-11 period. The first auction took place on 25 September 2008, with 12 565 387 CO2 emissions allowances from Connecticut, Maine, Maryland, Massachusetts, Rhode Island, and Vermont offered for bid to parties. These included entities with compliance obligations, allowance brokers, investors, and environmental groups. 59 separate entities submitted bids. The clearing price was USD 3.07, and the auction generated over USD 38 million in proceeds. States will use these funds for energy efficiency programmes, to mitigate price impacts of the programme on consumers, to stimulate investment in the renewable energy sector, and to cover the administrative costs of the programme.  Auction number 33 took place on 7th of September 2017.

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