As states wait for the United States Environmental Protection Agency (EPA) to issue a greenhouse gas performance standard for existing fossil generators, many are exploring the development of compliance plans to meet EPA requirements in the least disruptive manner and at the lowest cost.

Complying With 111(d): Exploring the Cap-and-Invest Option, looks at the Regional Greenhouse Gas Initiative (RGGI), an electric sector CO2 emissions reduction program for fossil generators established by Northeastern states, as a model for compliance. Published in the February edition of Public Utilities Fortnightly, the article considers how EPA might develop New Source Performance Standards for existing electric fossil generators under Section 111(d), and how EPA’s approach could open the door for states to comply through greater investment in their own clean energy programs—the “cap-and-invest” solution adopted by RGGI.

According to the article, one should not confuse cap-and-invest with cap-and-trade. In a cap-and-invest model, states auction allowances and recycle the revenues into clean energy programs that further reduce CO2 emissions. Following this model, RGGI states have jointly raised more than $1.5 billion which they individually invest in energy efficiency programs, renewable energy technologies, and other programs to reduce emissions.

“While there’s plenty of conventional wisdom about cap-and-trade, there’s far less understanding of cap-and-invest,” said David Farnsworth, senior associate and author of the article. “As they weigh various approaches to compliance with 111(d), states may want to take a page from the RGGI playbook and consider a cap-and-invest approach.”

Further Preparing for EPA Regulations reviews compliance alternatives for the half-dozen EPA regulations expected within the next several years, including guidelines for greenhouse gas emissions under 111(d). More information is also available on RAP’s Complying with Environmental Regulations page.

Contact: Rebecca Wigg +1 802 498 0714 [email protected]