New England’s Regional Greenhouse Gas Initiative (RGGI) has produced enviable results. In the program’s first eight years, its member states achieved a 95 percent decrease in petroleum-based power generation and a 63 percent increase in non-hydro renewables. As the first cap-and-trade program in the United States to cover carbon emissions from power plants, RGGI chose to auction the CO2 allowances, enabling investment of the auction proceeds in energy efficiency and other consumer programs. More aptly titled, it is a “cap-and-invest program.” In a presentation to the Association of Climate Change Officers (ACCO), David Littell explained the features of this proven, market-based model and highlighted its multiple environmental, consumer, and economic benefits.
A conventional “top down” cap-and-trade approach that relies on price alone is more expensive and less likely to succeed than a portfolio-based policy menu with a cap. By coordinating cap-and-trade policies with other clean energy strategies, an overall reduction of carbon emissions can be achieved at a lower cost to consumers. In the first five years of the initiative, RGGI invested more than $1 billion of auction proceeds in a range of energy efficiency, clean and renewable energy, direct bill assistance, and greenhouse gas abatement programs. Cap-and-invest also provides a strong, cost-effective model for state compliance under the United States Environmental Protection Agency’s Clean Power Plan.