The Regional Greenhouse Gas Initiative (RGGI) establishes a regional cap-and-trade program to reduce harmful carbon dioxide emissions from power plants.

Background

• Since 2005, 10 Northeastern states have developed and signed on to RGGI: New Hampshire, Connecticut, Delaware, Maine, New Jersey, New York, Vermont, Maryland, Massachusetts and Rhode Island.
• New Hampshire will be the last of the 10 states to pass implementation legislation (HB 1434)
• Western and Midwestern states are developing similar agreements, using RGGI as a model.

Benefits

• RGGI will help reduce greenhouse gas emissions throughout the region.
• A UNH study indicates that New Hampshire will benefit economically by joining RGGI. Over the next 10 years, New Hampshire citizens will see lower electric bills, increased economic growth, and 800 new jobs if RGGI auction proceeds are invested in energy efficiency.
• The same study found that New Hampshire will still pay the cost of RGGI without receiving any of its benefits if the state decides against joining. In the long term, energy prices will be higher and New Hampshire will lose jobs if it does not join the other Northeastern states in participating in RGGI.

Trading Program

• The cap for the 10-state region will start at 188 million allowances. One allowance equals 1 ton of carbon dioxide. New Hampshire’s budget is 8.6 million allowances.
• RGGI would require stabilizing emissions levels from 2009 through 2014, and then a 10 percent reduction in emissions from 2015 to 2018.
• In addition to allowances from the participating states, generators can purchase a certain percentage of offset allowances from alternative sources, such as projects that capture methane gas from landfills.

Market

• HB 1434 proposes to auction the allowances in an open market. The RGGI member states are now working on creating a regional market, where auctions would combine allowances from all the RGGI states. It is proposed that auctions would be held quarterly.

Use of Proceeds from Allowance Auction

• HB 1434 places all auction proceeds into a fund administered by the Public Utilities Commission to be used for energy efficiency and conservation. At least 5 percent of the fund would be used to assist low-income residential customers. The UNH study found that investing the funds in this way is the best way to lower energy costs in New Hampshire in the long term.