US Compliance Markets
The Regional Greenhouse Gas Initiative (RGGI) is the only compliance greenhouse gas emissions reduction program that’s currently in effect in the United States. Ten states participate in RGGI: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. These states cap CO2 emissions from the power sector, and require a 10% reduction in these emissions by 2018. Other states and provinces participate as observer states and regions: Pennsylvania, District of Columbia, Québec, New Brunswick, Ontario.
RGGI is implementing a cap and trade system for CO2 emissions from power plants in the member states. Beginning in September 2008, emission allowances are auctioned on a quarterly basis and the first three-year compliance period begins on January 1, 2009. Auction proceeds will be used by the states to promote energy conservation and renewable energy. RGGI affects fossil fuel power plants with 25 MW or greater generating capacity.
RGGI rules allow the award of CO2 offsets to five categories of GHG emission reduction projects outside the electric power generation sector. RGGI offsets may be used for only a limited portion of a source’s compliance obligation. Initially, the use of offsets is constrained to 3.3% of a power plant’s total compliance obligation during a control period, and can be expanded to 5% and 10% if certain CO2 allowance price thresholds are reached.
RGGI also allows for emissions credit retirements from a mandatory program outside the United States (e.g., Clean Development Mechanism CERs) to be used as an offset under certain conditions.
Other regional and state-level programs, in addition to RGGI, are currently in planning phases: Western Climate Initiative (WCI), Midwest Climate Initiative (MCI), AB-32 etc.