3 years of RGGI carbon market results

A report released this week by the Regional Greenhouse Gas Initiative (RGGI) shows that carbon dioxide emissions from power plants in RGGI member states fell by 23% over the program's first three years.

RGGI, the first major market-based greenhouse gas regulatory program in the United States, represents a cap-and-trade approach to reducing the emission of carbon dioxide and other greenhouse gases.  Ten states - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont - originally agreed to cap and reduce the greenhouse gas emissions of their electrical energy sectors by 10% by 2018.  (New Jersey subsequently withdrew from the compact effective January 1, 2012.)  RGGI's first three-year compliance period ran from January 1, 2009 through December 31, 2011.

This week's report documents the performance of the RGGI member states in reducing greenhouse gas emissions from the electricity sector.  According to the report, 97% of covered power plants - 206 out of 211 covered units - met program compliance obligations.  (Raw data on each plant's performance is available through the RGGI CO2 Allowance Tracking System, also known as COATS.)  Over the three-year period, annual CO2 emissions for the three-year period averaged 126 million short tons.  This represents a 23% reduction compared to 2006-2008. 

Part of the reduction may be attributed to increased state investment in energy efficiency as well as the economic slowdown.  However, CO2 emissions in the region decreased nearly ten times more than electricity consumption did: according to the U.S. Energy Information Administration, three-year average electricity consumption across the ten-state region experienced only a 2.4% decrease over the same time. This points to another significant trend in northeastern electricity markets: a shift away from coal to natural gas as the combustion fuel of choice for thermal power plants.