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Summary (ICAP)

Summary provided by the secretariat of the International Carbon Action Partnership (ICAP), a multilateral forum working on carbon markets. For more information, visit ICAP’s website.  Copyright © ICAP and reproduced with permission.

General information:

The Regional Greenhouse Gas Initiative (RGGI), is the first mandatory greenhouse gas ETS in the United States. A The system covers the electricity sector of the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. RGGI entered into force on 1 January 2009 and participating RGGI states have committed to a reduction target of more than 50% from 2005 GHG levels by 2020.

RGGI concluded its Second Program Review in 2017 and a new Model Rule has been prepared, including a cap with a 30% compared to 2020 levels. Furthermore, an Emissions Containment Reserve (ECR) will be established to achieve greater emission reductions if the cost is lower than anticipated.

Background information:

The absolute cap in 2014 was 91 M short tons CO₂ and is reduced annually by 2.5% to reach approximately 78 M short tons CO₂ in 2020.

Phases and compliance periods:

RGGI’s trading period is referred to as a control period.

First control period: 2009-2011
Second control period: 2012-2014
Third control period: 2015-2017
Fourth control period: 2018-2020

Temporal flexibility:

Banking is allowed without restrictions.
Borrowing is not allowed.

Provisions for price management:

Minimum auction price: USD 2.20 in 2018, increasing by 2.5% per year (to reflect inflation).

Cost Containment Reserve (CCR): As of 2014, RGGI states created a Cost Containment Reserve (CCR), where allowances are released to the market when certain trigger prices are reached. Trigger Prices: USD 10 in 2017. Between 2018 and 2020, the CCR trigger price will increase annually by 2.5%.

Model Rule: In 2021, under the Model Rule, the trigger price will be set at USD 13 and will increase by 7% compared to the previous year thereafter.

Emissions Containment Reserve (ECR): Allowances would be withheld from circulation (from auction) to secure emissions reductions if the emission reduction costs are lower than projected. In 2020, this trigger price will be set at USD 6, increasing by 7% compared to the previous year thereafter.

For further information, visit the ICAP ETS Map.

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