Regional Greenhouse Gas Initiative:Lessons Learned from the

Design of the Nation’s First Carbon Cap-and-Trade Program

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• Brief Background on RGGI

• Some RGGI Innovations

• Lessons Learned

Overview

The Nation’s First Mandatory

Cap-and-Trade Program for Carbon Dioxide

Launch Date: Jan. 1, 2009

Regional Greenhouse Gas Initiative

• April 2003 Invitation • 3 Year Design

Process• December 2005

Memorandum of Understanding (7 States)

• Model Rule Completed• MA & RI Joined• MD to Sign

Process

• 48.8 million people—(16% of US Population)

• 10% of U.S. Emissions

• 8th largest emitter in the world

• $2.4 trillion economy (19% of U.S.)

The Region at a Glance(CT, DE, ME, MD, ME, NH, NJ, NY, RI & VT)

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• Stabilize emissions at current levels through 2014;

• then reduce by 10% by 2019

• ~13% below 1990 levels

• ~35% below business as usual

Reduction Requirements

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• Firing Biomass/Biofuel a “control” method• Offsets “Valve”• Offsets—5 Initial Types:

– Natural Gas, Propane, Heating Oil Efficiency;– Land to Forest;– Landfill Gas Capture & Combustion;– Methane Capture from Animal Operations; &– SF6 Leak Prevention.

• Recognition of International Currencies

RGGI Innovations

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• Allocations– States agreed to propose minimum 25%

public benefit allocation in MOU– A number of states have proposed 100%

auction: • New York • Massachusetts• Maine• Vermont • New Jersey (“up to 100%”)

RGGI Innovations

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• Clear, Simple Rules

• Allowance Allocations Provide Opportunity to Lessen Impacts of the Program

• Integrity of Offsets Requires Careful Approach to Design & Implementation

Lessons Learned

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• Complete RGGI Implementation– Get rules on the books– Auction Platform and Tracking System– First auction early 2008?

• Bring Maryland On• Add Additional States—PA?• Link to California? Others in West Coast AZ,

NM, OR, WA?• Address Imports of Electricity

RGGI Next Steps

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• MOU among RGGI States Welcomes Participation by Additional States

• RGGI + California =– 28.5% of U.S. Population– 32% of U.S. Economy– 3rd Largest World Economy– 17% of U.S. GHG Emissions– 6th Largest Emitter Worldwide

RGGI + California

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Franz LitzClimate Change Policy CoordinatorNY Dept. of Environmental Conservationftlitz@gw.dec.state.ny.us