Test Driving Cap and Trade

Currently, 10 New England states are participating in the Regional Greenhouse Gas Initiative, which is a carbon cap and trade system that began in 2008.

Participating States: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont

Quick Description: RGGI auctions off allowances to the power sector, monitors emissions, and fines companies that fail to meet requirements. Companies are permitted to trade credits and purchase additional carbon offsets. Auction money and fines are collected by the states and then invested in energy efficiency and renewable energy initiatives. Four auctions are held each year. The goal is a 10% reduction of emissions by 2018.

Last year, New York Governor Paterson used $90 million generated from the initiative to reduce state debt. He claimed it was a one-time deal. I hope it is. The state claims that today, 80% of revenue is invested in green initiatives, such as EmPower New York, which funds home energy audits. In a recent auction, New York received $16.9 million. Hopefully, it goes to the right programs.

While RGGI’s failure would kill cap-and-trade forever, its success could be a stepping stone to national policy.

Let’s hope it works.