Regional Greenhouse Gas Initiative: Lessons Learned from the Design of the Nation’s First Carbon Cap-and-Trade Program

2 Brief Background on RGGI Some RGGI Innovations Lessons Learned Overview

The Nation’s First Mandatory Cap-and-Trade Program for Carbon Dioxide Launch Date: Jan. 1, 2009 Regional Greenhouse Gas Initiative

April 2003 Invitation 3 Year Design Process December 2005 Memorandum of Understanding (7 States) Model Rule Completed MA & RI Joined MD to Sign Process

48.8 million people— (16% of US Population) 10% of U.S. Emissions 8 th largest emitter in the world $2.4 trillion economy (19% of U.S.) The Region at a Glance (CT, DE, ME, MD, ME, NH, NJ, NY, RI & VT)

6 Stabilize emissions at current levels through 2014; then reduce by 10% by 2019 ~13% below 1990 levels ~35% below business as usual Reduction Requirements

7 Firing Biomass/Biofuel a “control” method Offsets “Valve” Offsets—5 Initial Types : – Natural Gas, Propane, Heating Oil Efficiency; –Land to Forest; –Landfill Gas Capture & Combustion; –Methane Capture from Animal Operations; & –SF 6 Leak Prevention. Recognition of International Currencies RGGI Innovations

8 Allocations –States agreed to propose minimum 25% public benefit allocation in MOU –A number of states have proposed 100% auction: New York Massachusetts Maine Vermont New Jersey (“up to 100%”) RGGI Innovations

9 Clear, Simple Rules Allowance Allocations Provide Opportunity to Lessen Impacts of the Program Integrity of Offsets Requires Careful Approach to Design & Implementation Lessons Learned

10 Complete RGGI Implementation –Get rules on the books –Auction Platform and Tracking System –First auction early 2008? Bring Maryland On Add Additional States—PA? Link to California? Others in West Coast AZ, NM, OR, WA? Address Imports of Electricity RGGI Next Steps

11 MOU among RGGI States Welcomes Participation by Additional States RGGI + California = –28.5% of U.S. Population –32% of U.S. Economy –3 rd Largest World Economy –17% of U.S. GHG Emissions –6 th Largest Emitter Worldwide RGGI + California

12 Franz Litz Climate Change Policy Coordinator NY Dept. of Environmental Conservation