The cap in the nation's first mandatory cap-and-trade system is probably set too high. As reported by ClimateWire this morning, it seems increasingly likely that participants in the Regional Greenhouse Gas Initiative (RGGI) will easily meet and beat RGGI's ultimate goal, even without any changes or reductions actually caused by the program.
RGGI's initial aim was to cut CO2 emissions from large power plants in the 10-state region to 10% below 2005 levels by 2018. This plan involved two stages: one with the cap stabilized at 180 million tons CO2e from 2009-2014, and the second, from 2015-2018, with a cap declining by 2.5% each year. However, in the two years that the program has been in action, emissions have already declined to 33% below 2005-levels. Although the decline has been commonly attributed to the economic downturn, NYSERDA found that fuel switching by power suppliers from coal and petroleum to natural gas (cheaper than it was in 2005) has in fact had the greatest impact, contributing 31.2% of the decline.
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At a meeting on November 12, RGGI, stakeholders gathered to hear briefings on projections for future emissions, why the carbon footprint was overestimated thus far, and what changes need to be made to RGGI going forward. Consultant IGF International reported that although emissions in the region are predicted to grow steadily into the future, they will stay well below RGGI's initial reduction target through 2030, even without additional reductions caused by the energy efficiency and renewable energy programs funded by RGGI itself. Their data suggests that the RGGI cap would have to be tightened from 10% reductions by 2018 to 22% or higher, for the cap-and-trade system to have any impact at all.
The RGGI member states are currently involved in evaluating the program, and could make changes to the cap, as well as the rest of the program, before the second compliance phase begins in 2012. It will be interesting to see what decisions they make over the next year.