Overview of The Regional Greenhouse Gas Initiative Stephen

Overview of The Regional Greenhouse Gas Initiative Stephen Majkut January 5, 2006

The Regional Greenhouse Gas Initiative • A cap and trade program for power plants • Designed by nine northeastern states over the past 2 ½ years • A Consensus Regional/National Option in the RI GHG Action Plan • www. rggi. org

RGGI Overview • Fossil fuel power plants >25 MW • Start 2009 • Stabilize CO 2 emissions from 2009 to 2014, approximately at 1990 levels • Reduce CO 2 emissions by 10% in 2018 • Regional budget of 121 millions tons of CO 2 through 2014

RGGI Overview (con’t. ) • Each states agrees to an emissions budget • States may distribute allowances as they please, but, • 25% (minimum) would be sold and the funds used for consumer benefit or strategic energy purposes • Banking and early reduction credits • Three year compliance period

RGGI Overview (con’t. ) • Offsets allowed • In RGGI region at 1: 1, but rest of US at 2: 1 discount • Up to 3. 3% of a power plant’s emissions – – – Landfill gas Sulfur hexafluoride End-use energy efficiency Afforestation Farming operations Natural gas transmission & distribution

RGGI Overview (con’t. ) • If allowance prices exceed $7/ton – Offsets from North America - at 1: 1 – Power plants can offset up to 5% of emissions • If allowance prices exceed $10/ton – Compliance period extended by a year • If allowance prices exceed $10/ton after two compliance period extensions – International offsets - at 1: 1 – Power plants can offset up to 20% of emissions for last 3 years

RGGI Overview (con’t. ) • Continue to study emissions leakage • Program review in 2012 • Transition to a comparable federal program • Other states may join by agreement of all the signatory states • However, Rhode Island Massachusetts may join anytime

Retail Price Impacts

Household Electric Bill Impacts

Impact on Regional Economy

Wrap-up • Seven states announced agreement on December 20 th • Massachusetts didn’t join reportedly because of a lack of a hard price cap • Rhode Island didn’t join at this time because of concerns about the potential impacts on energy prices throughout our region • Governor staff and DEM will continue to participate in the process