Common Contracts

Design Elements for Regional Allowance Auctions under the Regional Greenhouse Gas Initiative

March 16th, 2008

• Filed
  March 16th, 2008

The Regional Greenhouse Gas Initiative, or RGGI, is an agreement among the Governors of ten Northeastern and Mid-Atlantic states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont) to reduce greenhouse gas emissions from power plants. The RGGI states (participating states) have committed to cap and then reduce the amount of carbon dioxide (CO2) that certain power plants are allowed to emit, limiting the region’s total contribution to atmospheric greenhouse gas levels. The participating states have agreed to implement RGGI through a regional cap-and-trade program whereby the participating states anticipate auctioning nearly the entire annual regional emissions budget, which initially is approximately 188 million short tons of CO2. Each ton of CO2 will constitute an “allowance.”