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As U.S. economists, scientists, and policymakers weigh the costs and benefits of different paths for controlling emissions, they have only a limited understanding of the impacts of any one policy on mitigation efforts and the economy. Several countries, including the U.S., have adopted internal methods for reducing greenhouse gas emissions, which can be important models for decision-making about international partnerships.  

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort to reduce greenhouse gas emissions from power generation amongst Northeast and Mid-Atlantic states, including Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.i

RGGI is a cap-and-trade system, where participating states set a regional cap on CO2 emissions from power plants and distribute a fixed number of emissions allowances to these plants. Power generators must obtain and surrender an allowance for each ton of CO2 they emit. The number of available allowances decreases over time, effectively reducing overall emissions. Additionally, the proceeds from the sale of emissions allowances are reinvested in various programs to promote energy efficiency, renewable energy, and other initiatives aimed at reducing greenhouse gas emissions. RGGI also helps build collaboration between the states through the sharing of best practices and development of large renewable energy projects.  

Overall, RGGI has been effective at reducing emissions in member states by 35% since its inception in 2009. Other potential downsides, such as increased power costs for consumers or increased fossil fuel production in other areas, have largely not been seen.  RGGI is one of many potential models that demonstrate how regulation at the national or international level could be successful.

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Endnotes

• iSee the Regional Greenhouse Gas Initiative at https://www.rggi.org/.