	Introduction

A number of states and local governments have taken actions to address greenhouse gas (GHG) emissions. One of the most significant climate change developments at the state level is the Regional Greenhouse Gas Initiative (RGGI, pronounced "Reggie"), which is based on an agreement signed by RGGI governors in 2005. RGGI currently involves nine states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. The results of the RGGI program may be informative to policymakers, because RGGI may serve as a possible test case for a federal cap-and-trade program, providing insights into implementation complexities, the mechanics of various design elements, and lessons of potential design pitfalls. Several of RGGI's design elements generated considerable interest during the development and debate of federal proposals to address GHG emissions. RGGI Overview

RGGI is a sector-specific cap-and-trade system that applies to CO 2 emissions from electric power plants with capacities to generate 25 megawatts or more —164 facilities in the nine RGGI states. Emission allowance auctions . Emissions Cap

Although RGGI is one of the more aggressive state programs addressing GHG emissions, the program's first emission cap exceeded actual emissions since its inception in 2009. The first cap never compelled regulated entities to make internal emission reductions or purchase emission credits (or offsets). This change took effect in January 2014. The figure depicts a substantial decline in carbon-intensive electricity generation, particularly coal, over that time frame. In 2005, RGGI states generated 33% of their electricity from coal and petroleum, sources of energy with relatively high carbon intensity. In 2016, these sources generated 7% of RGGI's electricity. Impacts of the Original Emissions Cap

Although RGGI's original emission cap did not directly require emission reductions (due to unexpected emission levels, discussed above), the cap, and the overall RGGI program, still had impacts. First, the cap's existence attached a price to the regulated entities' CO 2 emissions. Second, the cap's emission allowances were a new form of currency. The emission allowance value can be used to support various policy objectives, including (as is the case with RGGI) energy efficiency and renewable energy investments. Several RGGI studies indicate that supporting energy efficiency provides multiple benefits: emission reduction, consumer savings via lower electricity bills, and regional job creation. The revised cap took effect in January 2014. During this period, the reserve price ($1.86-$1.93 per ton) acted like an emissions fee or carbon tax. The RGGI states (as a group) have more than doubled this commitment. As mentioned above, RGGI auction revenues have accounted for the vast majority (approximately 91%) of the emission allowance value created by the emissions cap. The RGGI states significantly altered their emissions cap in 2014, and this new cap may have different effects than the original emissions cap. It is uncertain how this new development may impact electricity use and prices in the RGGI region and, in turn, the perception and support for the program. As a group, the nine RGGI states account for approximately 7% of U.S. CO 2 emissions from energy consumption and 16% of the U.S. gross domestic product (GDP). Table 2 indicates that RGGI's aggregate CO 2 emissions from energy consumption rank in the top 20 among nations. But from a practical standpoint, the RGGI program's contribution to directly reducing the global accumulation of GHG emissions in the atmosphere is arguably negligible.
The Regional Greenhouse Gas Initiative (RGGI) was the nation's first mandatory cap-and-trade program for greenhouse gas (GHG) emissions. RGGI involves nine states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. The RGGI cap-and-trade system applies only to carbon dioxide (CO2) emissions from electric power plants with capacities to generate 25 megawatts or more—approximately 168 facilities. The RGGI emissions cap took effect January 1, 2009, based on an agreement signed by RGGI governors in 2005.
The results of the RGGI program may be instructive to policymakers. Several of RGGI's design elements generated considerable interest during the development and debate of federal proposals to address GHG emissions. In particular, the program's emissions cap has received particular attention. When the original cap took effect in 2009, it did not compel regulated entities to make internal emission reductions or purchase emission credits from other sources. Several factors led to this outcome: RGGI's cap design, an economic downturn, and a substantial shift to less carbon-intensive fuels. For instance, in 2005, RGGI states generated 33% of their electricity from coal and petroleum, sources of energy with relatively high carbon intensity. In 2016, these sources generated 7% of RGGI's electricity.
To address the disparity between the cap and actual emissions, RGGI states agreed (in 2013) to reduce the existing cap (by 45%) so that the cap level would match actual emissions. The revised cap took effect in January 2014. RGGI's revised cap may have vastly different effects than its predecessor. It is uncertain how this new development may impact electricity use and prices in the RGGI region and, in turn, the perception and support for the program.
Although actual emissions were ultimately well below the original emissions cap, the cap's existence attached a price to the regulated entities' CO2 emissions. Because the cap level was above actual emissions, the allowance price acted like an emissions fee or carbon tax. Although the cap likely had limited direct impact on the region's power plant emissions, the revenues generated from the emission allowance sales likely had some impact on emission levels in the region.
Through 2016, RGGI states, as a group, have sold 91% of their emission allowances through quarterly auctions. The auction proceeds—over $2.7 billion to date—have provided a new source of revenue, which has been used to support various policy objectives. RGGI states (as a group) have distributed the vast majority of the emission allowance value to support energy efficiency, renewable energy, other climate-related efforts, or electricity consumer assistance. Several RGGI studies indicate that supporting energy efficiency provides multiple benefits: emission reduction, consumer savings via lower electricity bills, and job creation.
As a group, the total CO2 emissions from the nine RGGI states account for approximately 7% of U.S. CO2 emissions (and 16% of U.S. gross domestic product). RGGI's aggregate emissions rank in the top 20 among all nations. But from a practical standpoint, the RGGI program's contribution to directly reducing the global accumulation of GHG emissions in the atmosphere is arguably negligible. However, RGGI's activities may stimulate action in other states or at the federal level: Compared to a patchwork of state/regional requirements, industry stakeholders may prefer a singular national policy. For a number of reasons, experiences in RGGI may be instructive for policymakers seeking to craft a national program.