The RGGI CO2 Cap

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The RGGI CO2 cap represents a regional budget for CO2 emissions from the power sector. A CO2 allowance represents a limited authorization to emit one short ton of CO2 from a regulated source, as issued by a participating state.

The RGGI cap and RGGI adjusted cap for the years 2018-2020 are as follows. Post-2020 cap levels have been established through program review, and are detailed in the Principles to Accompany Model Rule Amendments. (States will next begin state-specific processes to bring the changes arising from program review into effect, based on the updated 2017 Model Rule).

The RGGI states include adjustments to the RGGI cap to account for banked CO2 allowances. The total interim adjustment for 2014-2020 is 139.5 million CO2 allowances. See the Second Control Period Interim Adjustment for Banked Allowances Announcement for more details on the 2014-2020 adjustments.

Based on the 2017 Model Rule, the post-2020 RGGI cap also will include adjustments for banked allowances, as of the end of the year 2020. The amount of the adjustment will be calculated in 2021 according to a formula established in the revised Model Rule.

Cost Containment Reserve

The RGGI states have established a Cost Containment Reserve (CCR), consisting of a quantity of allowances in addition to the cap which are held in reserve. These are only made available for sale if allowance prices exceed predefined price levels, so that the CCR will only trigger if emission reduction costs are higher than projected.

The CCR trigger price will increase by 2.5% per year until 2020, and its size will be 10 million allowances each year. Then, based on the 2017 Model Rule, after 2021 the CCR size and trigger price trajectory will change. The the CCR Trigger Price will be $13.00 in 2021 in 2021, and rising at 7% per year thereafter. The CCR’s size will be 10% of the regional cap each year.

Emissions Containment Reserve

Based on the 2017 Model Rule, the RGGI states will also establish an Emissions Containment Reserve (ECR) beginning in 2021. States implementing the ECR will withhold allowances from circulation to secure additional emissions reductions if prices fall below established trigger prices, so that the ECR will only trigger if emission reduction costs are lower than projected.

The ECR trigger price will be $6.00 in 2021, and rise at 7% per year thereafter. Its size will be 10% of the budgets of the states implementing the ECR (Note that at this time, Maine and New Hampshire do not intend to participate in the ECR).

For a table of CCR and ECR sizes and trigger prices over time, see the Principles to Accompany Model Rule Amendments.

Historical Cap Levels