A new report from Acadia Center highlights the benefits of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program in the New England states, New York, Maryland, and Delaware that started six and a half years ago. The benefits, which stem from emissions reductions and investing revenue the program generates, include declining energy bills, reduced illnesses, and job creation among others.

A cap-and-trade program sets a limit on the amount of CO2 that a region’s electric power generators can release into the atmosphere, with that cap level dropping each year. Companies can purchase permits to release CO2 (called “allowances” in RGGI) through quarterly auctions, and if companies find that they have too many or too few allowances to cover their own CO2 emissions, they can trade with other companies in order to meet their compliance obligations.

RGGI invests 59% of the auction revenue this process creates in energy efficiency programs that reduce consumers’ bills and reduce demand for power. Lower power demand means fewer emissions from power plants, and less money leaving the region to pay for imported fossil fuels.

Independent macroeconomic analysis found that programs supported with revenue raised over RGGI’s first six years of operation would generate over $1.73 billion in energy bill savings. These savings create over $2.76 billion in net economic gains and over 28,500 job-years of employment.

In addition, contrary to projections, electricity prices have declined since RGGI took effect. Comparing average retail electricity prices from 2008 (the year before RGGI’s launch) to 2014 shows that prices have dropped by 2% on average across the region. During the same 2008-2014 period electricity prices in non-RGGI states increased by 13%.

RGGI State Electricity Prices, 2008 and 2014 (Cents/kWh)

RGGI Electricity Prices 2008_2014


Most importantly RGGI is achieving its main goal, reducing pollution. CO2 emissions from the 167 power plants covered by RGGI totaled 86,307,909 short tons of CO2 in 2014, which was 5.2% below the 2014 emissions cap of 91,000,000 tons. In addition, when plants are required to pay for CO2 emissions it makes it less economical to operate dirtier plants in comparison to cleaner generating sources. This along with regulations outside RGGI specific to hazardous pollutants helps reduce sulfur dioxide (SO2), nitrogen oxide (NOx), and mercury (Hg) emissions.

Reducing emissions of hazardous pollutants leads to health savings by avoiding illness, hospital visits, lost work days, and premature deaths. In monetary terms, the reduction in hazardous emissions from RGGI’s launch (January 1, 2009) through 2014 translates into nearly $11 billion for SO2 and NOx combined.

Reduction of Hazardous Pollution

Reduction of Hazardous Pollution Graph from RGGI Program Report 073115

These benefits show that RGGI offers a proven, cost-effective pathway to achieve emissions reduction targets. Which is why, with a few adjustments, Acadia Center believes RGGI is a model program for states to adopt in order to meet the Environmental Protection Agency’s (EPA) forthcoming Clean Power Plan (CPP) requirements. When EPA’s final carbon pollution standards are released (which could be as early as next week) we will provide an update on implications for RGGI.





Peter Shattuck is the Director of Acadia Center’s Clean Energy Initiative and our Boston office. Peter’s work at Acadia Center focuses on cleaning up the energy supply across all sectors of the economy. Driving market-based emissions reductions is at the core of this work, using cap and trade policies such as the Regional Greenhouse Gas Initiative, which Acadia Center has tracked since the program’s early development in the 2000s and which Acadia Center is now promoting beyond the region.


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Jordan Stutt is a Policy Analyst in Acadia Center’s Boston office. He works on energy, transportation and climate change issues, with an emphasis on research and policy analysis for energy systems and carbon markets. He was an Energy Policy Analyst at Pace Energy and Climate Center, Pace University Law School in White Plains, NY, where he focused on energy efficiency and RGGI.