RGGI Credits
CO2 Allowances for the The Regional Greenhouse Gas Initiative
We supply RGGI credits for the Regional Greenhouse Gas Initiative, a collaborative effort established in 2009 among eleven Northeastern and Mid-Atlantic U.S. states to combat climate change and encourage clean energy investment by implementing a cap-and-trade program aimed at reducing CO2 emissions from the power sector. It imposes a regional emissions cap, mandating that power plants with capacities of 25 MW or greater acquire allowances equivalent to their emissions. RGGI credits are primarily distributed through quarterly auctions conducted by participating states. The total number of allowances is capped and gradually reduced over time to ensure continuous emission reductions. Revenue generated from allowance auctions funds energy efficiency and renewable energy projects, delivering economic and public health benefits. Power generators are required to monitor and report emissions, acquire necessary allowances from auctions or the secondary market, and can trade allowances to optimize operational flexibility.
Understanding RGGI’s regulatory structure and market dynamics is crucial for strategic involvement, as it not only helps meet compliance but also capitalizes on investment opportunities in clean energy. Our expertise in environmental markets, trading and regulatory compliance helps clients navigate the RGGI system effectively. Contact our Environmental Commodities team to learn more.
The Role of RGGI Credits
RGGI allowances are a central component of the market-based cap-and-trade system. They serve as a mechanism to cap the total emissions within the RGGI region and create a financial incentive for reducing emissions. Power plants must hold allowances equal to their emissions, and these allowances can be bought and sold in the RGGI market.
Regional Effort: Participating states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia.
Quarterly Auctions: Allowances are primarily distributed through quarterly auctions, generating revenue for the states. The auction process ensures that the market determines the price of allowances.
Revenue Use: The proceeds from these auctions are reinvested in energy efficiency, renewable energy, and other consumer benefit programs in the participating states.
Who is Involved: Electric power generators with a capacity of 25 megawatts (MW) or greater in the participating states are required to participate in RGGI.
Allowance Trading: Once an allowance is distributed after the auctions, it can be held and traded, which creates a secondary market for allowances. Power plants can buy additional allowances if they expect to exceed their emission limits or sell excess allowances if they emit less than their allowance. Allowance prices are determined by supply and demand dynamics in the auctions and secondary market.
Offset Allowances: Certain projects that reduce CO2 and other greenhouse gas emissions outside of RGGI regulations may be eligible for awards of RGGI CO2 offset allowances. To be eligible, a project must be located within one of the RGGI states and fall into one of the offset project categories accepted by that state. Offset allowances are transferable and may be used by regulated power plants.
Compliance Periods: RGGI operates in three-year compliance periods. At the end of each three-year compliance period, power plants must hold and surrender enough allowances to cover their total emissions during that period.
Emissions Monitoring: Participants must monitor and report their CO2 emissions accurately, ensuring transparency and accountability.
Banking Allowances: Power plants can bank unused allowances for future use, providing a cushion against future regulatory changes or unexpected increases in emissions.
Cost Containment: RGGI includes mechanisms such as a Cost Containment Reserve (CCR), which releases additional allowances if prices exceed certain thresholds, to prevent excessively high costs. Emissions Containment Reserve (ECR) allowances are withheld from sale at an auction if the price would otherwise fall below a set trigger price.
The Benefits of using RGGI Credits
The Regional Greenhouse Gas Initiative is a pioneering cap-and-trade program in the United States that has demonstrated the feasibility of regional cooperation in reducing greenhouse gas emissions.
It offers environmental, economic, and public health benefits while presenting certain challenges and opportunities for power generators, traders, and investors. Here are some key benefits of RGGI allowances:
Environmental Benefits
Targeted CO2 Reduction:
The cap-and-trade system ensures systematic and measurable reductions in CO2 emissions from the power sector.
Air Quality Improvement:
Lower CO2 emissions lead to better air quality, which can reduce health problems related to air pollution.
Carbon Footprint Reduction:
By capping and reducing emissions, RGGI helps mitigate the impacts of climate change, contributing to global efforts to limit temperature rise.
Economic Benefits
RGGI has spurred investments in energy efficiency and renewable energy, leading to job creation and economic growth. The initiative has also helped reduce energy bills for consumers.
Cost-Effective Compliance:
The trading of RGGI allowances allows power plants to find the most cost-effective ways to meet emission targets, reducing overall compliance costs. Entities that can reduce emissions at a lower cost can sell their excess allowances to others, fostering economic efficiency.
Revenue Generation:
Revenues generated from the auctioning of allowances are reinvested in various beneficial programs, such as energy efficiency, renewable energy projects, and support for low-income communities.
Funding for Green Projects:
Auction revenues fund projects that promote renewable energy and energy efficiency, driving innovation and clean energy development.
Social and Community Benefits
Public Health Improvements:
Reduced air pollution from lower CO2 emissions can lead to fewer respiratory and cardiovascular problems, enhancing public health outcomes.
Support for Vulnerable Communities:
Funds from RGGI auctions are often directed towards programs that benefit disadvantaged communities, helping to address environmental justice concerns.
Policy and Regulatory Benefits
Regulatory Certainty:
RGGI provides a clear and predictable regulatory framework for businesses, helping them plan long-term investments in sustainability.
Regional Collaboration:
The initiative promotes collaboration among participating states, enhancing regional coordination and effectiveness in reducing emissions.
Scalability and Replicability:
RGGI serves as a successful model for other states and regions looking to implement similar cap-and-trade programs to reduce greenhouse gas emissions.
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GREEN-E® CERTIFICATIONTargray is a registered participant in the Green-e Energy renewable energy certification program. Green-e carbon products and solutions undergo a through investigation process ensuring they are sourced from a eligible energy sources (e.g. – wind, solar, geothermal, biomass or low-impact hydropower) that meet international standard criteria.
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The Verra RegistryVerra is a global leader helping tackle the world’s environmental and social challenges by developing and managing standards that help the private sector, countries, and civil society achieve ambitious sustainable development and climate action goals. The standards and programs Verra develops and manages are globally applicable and advance action across a wide range of sectors and activities. Programs undergo extensive stakeholder consultation and expert review, and draw from four key components: standard, independent assessment, accounting methodologies, and registry.
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Gold StandardThe Gold Standard (GS) is a voluntary carbon offset program focused on progressing the United Nation’s Sustainable Development Goals and ensuring that project’s benefit their communities. It can be applied to voluntary offset and Clean Development Mechanism (CDM) projects. The GS CDM was launched in 2003 after a two-year consultation with stakeholders, governments, non-governmental organizations, and private sector specialists from over 40 countries. The GS for voluntary offset projects was launched in 2006. The GS project registry – containing all projects implemented through the standard was launched in 2018.
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American Carbon Registry (ACR)The American Carbon Registry (ACR), a nonprofit enterprise of Winrock International, was founded in 1996 as the first private voluntary greenhouse gas registry in the world. Winrock operates ACR to create confidence in the environmental and scientific integrity of carbon offsets in order to accelerate transformational emission reduction actions.
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Climate Action Reserve (CAR)The Climate Action Reserve (CAR) is an offset registry for global carbon markets. CAR establishes high quality standards for carbon offset projects, oversees independent third-party verification bodies, issues carbon credits generated from such projects and tracks the transaction of credits over time in a transparent, publicly-accessible system.
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International Emissions Trading Association (IETA)The International Emissions Trading Association (IETA) is a non-profit association with more than 250 members who are active stakeholders in the international carbon and emissions markets. The organization was created in 1999 to establish a global framework for greenhouse gas emission reductions trading.
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INTERNATIONAL SUSTAINABILITY & CARBON CERTIFICATION (ISCC)ISCC is a globally applicable sustainability certification system that covers all sustainable feedstocks, including agricultural and forestry biomass, circular and bio-based materials and renewables. |
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Xpansiv CBLCBL has established the first of its kind Standard Instruments Program (SIP) to build on market infrastructure to accompany and govern the launch of spot contracts for the settlement and physical delivery of environmental commodities across existing registries that can be determined as meeting certain defined, standardized criteria for market quality and performance. |
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