What the Regional Greenhouse Gas Initiative's 1 Billionth Carbon Allowance Means for the Energy Industry
Last month, the Regional Greenhouse Gas Initiative (RGGI - pronounced ‘REGGIE’), the first mandatory market-based program for reducing greenhouse gas emissions, reached an important milestone—1 billion carbon allowances sold at auction.
Since 2008, nine states across the Northeastern US participating in RGGI have committed to a regional limit, or cap, on carbon emissions. To help emissions remain within this regional cap, RGGI offers carbon allowances—or emissions authorizations—for sale through quarterly auctions administered through Enel X’s live auction platform. Those entities required to comply must purchase allowances to cover their carbon emissions. The proceeds from these auctions are then re-invested by the participating states in programs such as renewable energy, energy efficiency, greenhouse gas abatement, and direct bill assistance.
Essentially, RGGI creates a market for carbon emissions across these states through quarterly auctions, with auction proceeds funding programs that result in a cleaner power sector across the entire region. With 45 auctions completed since 2008, RGGI has generated more than $3 billion in funding for these programs while also helping to avoid nearly 140 million MMBTu of fossil fuel use and reduce CO2 output by nearly 28 million short tons in the Northeast.
In reaching 1 billion carbon allowances sold, the RGGI participating states have demonstrated their ability not only to improve the efficiency and sustainability of the power sector, but also to do so using an effective and transparent market-based system. Through its partnership with Enel X, the RGGI states are able to distribute carbon allowances in a controlled, standardized setting that also provides participants clear visibility into bidding activity.
"A key element behind the success of the 45 auctions that RGGI Inc. has executed on behalf of the RGGI states is the efficiency of the auction process," said Andrew McKeon, Executive Director of RGGI, Inc. "For over a decade we have been aided by the excellent work of the auctions services core team, and there have been many important milestones. Certainly, the sale of the one billionth allowance stands out."