RGGI has opened a consultation on what other US states need to do in order to trade with the regional cap-and-trade market under the Clean Power Plan.

While RGGI was designed to be open-ended to allow other states to join the power generation cap-and-trade system, its regulators are now seeking views on what minimum requirements would need to be met to allow trade with states not initially willing to join.

Such provisions are envisaged by the federal government under the CPP, for which the vast majority of the 47 states facing targets are considering using carbon markets to meet their goals from 2022.

Under this so-called minimum compatibility trading, states would merely require common standards for crediting emission reductions and common tracking systems to enable utilities to trade, even between jurisdictions adopting absolute emission caps or those choosing “rate-based” CO2- intensity standards.

Some stakeholders have already voiced caution over the issue of linking RGGI to other markets, warning that lower prices elsewhere might encourage participants to import their permits, thereby depriving RGGI states of auction revenues used to fund renewable and energy efficiency measures.

The deadline for comments is May 9.

The consultation is part of this year’s RGGI programme review, where its regulators are mulling what changes to make to the market when its fourth trading phase starts in 2018, and also how its member states can use the scheme in the longer term to comply with the CPP.

The next stakeholder meeting for the review will be on Apr. 29 in Boston, as regulators craft final proposals due in the fourth quarter.

By Ben Garside – ben@carbon-pulse.com