Offsets Requirements

The following requirements were developed to ensure that offset projects represent CO2e emissions reductions or carbon sequestration that is real, additional, verifiable, enforceable, and permanent.

Consistency, Monitoring, and Verification Requirements

Applying for the award of CO2 offset allowances is a two-step process. 

First, the sponsor of a proposed offset project must submit a Consistency Application to demonstrate that the project meets the relevant state regulatory requirements. Consistency Applications must be submitted to the RGGI state where the majority of the CO2e emissions reductions or carbon sequestration is expected to occur. 

Projects that have been deemed consistent with state regulatory requirements must submit ongoing monitoring and verification reports demonstrating the achievement of CO2e emissions reductions or carbon sequestration prior to any award of CO2 offset allowances by a RGGI state.

Additionality Requirements

Key regulatory components include provisions that address project "additionality," emissions baselines and emissions reductions, and project monitoring and verification. RGGI states have promulgated materially consistent regulations, ensuring comparable offset quality across the region and fungibility of CO2 offset allowances.

Additionality addresses whether greenhouse gas emissions reductions achieved by an offset project  would not have occurred in the absence of a carbon market.  Additionality is the key criteria for ensuring that offset projects result in real emissions reductions in the context of a cap-and-trade program. Since a CO2 offset allowance is equivalent to a ton of CO2 emitted by a regulated power plant, projects must provide assurance that they are achieving emissions reductions that would not otherwise have occurred in the absence of RGGI's offset provisions.

State regulations employ both general and category-specific provisions addressing project additionality. Offset projects may not involve activities that are required by law, regulation, or administrative or judicial order.  Offset projects may not receive incentives from programs funded through RGGI auction proceeds or programs funded through electricity or natural gas ratepayers.  In addition, projects must meet category-specific benchmarks and performance standards designed to ensure that approved offset projects represent activities that significantly exceed standard market practice.

For further information, consult the offsets section of the Model Rule, which served as the basis for the development of state regulations, and the official state regulations.