Emissions Trends and the
Inaugural Allowance Auction
Regional Greenhouse Gas Initiative
September 3, 2008
1
The Regional Greenhouse Gas Initiative (RGGI) is
the first-in-the-nation carbon cap and trade
program designed to reduce greenhouse gas
emissions 10% from Northeastern and Mid-Atlantic
power plants by 2019. Electric generators covered
by RGGI must purchase an allowance (permit to
pollute) for each ton of carbon dioxide emitted.
The 10 states participating in RGGI have agreed to
hold uniform regional auctions for the emissions
allowances, with the first to be held on September
25, 2008.
The approaching inaugural auction has created
significant interest in RGGI emissions trends, and
in what the potential demand for allowances might
be from both regulated generators and other
entities. Environment Northeast (ENE) compiled this short report to supply background information
prior to the first auction. To this end ENE compiled and analyzed emissions trends through 2008, using
available Environmental Protection Agency (EPA) data and available data from the states. The report
further examines underlying factors that influence CO2 emissions levels, such as electricity consumption,
weather, economic trends and fuel switching. Lastly, the report discusses supply and demand dynamics,
such as non-generator demand, the schedule for supplying allowances to be auctioned, and the three year
RGGI compliance period.
Summary of Key Findings:
Emissions from facilities regulated under RGGI have declined significantly since the program was
negotiated in 2005 – a favorable trend – and remain well below the level of the regional RGGI cap,
which should moderate demand for allowances and keep prices down in the near-term if the trend
continues.
Although emissions have declined, there is significant potential for this trend to reverse should there
be a change in underlying emissions and energy consumption drivers – such as energy prices,
weather, economic trends, and availability