RGGI’s Cap Too High But …
There is an excellent article about RGGI on Yale Environment 360. RGGI, which stands for the regional greenhouse gas initiative, is a CO2 emissions cap and trade program involving several northeast US states. Some OR work has gone into the program’s auction structure (along with criticism of it) – see this post.
The article by Keith Schneider claims the main problem with RGGI at the moment is that the emissions cap was set too high due to industry pressure and fear of customer rate increases. The power plants being regulated are under the cap in total, so the incentive to reduce emissions is not what it could be had the cap been lower. In part, this is due to the slumping economy.
On the bright side, the article points out that the program has raised $261.3 million, which goes towards energy efficiency, clean energy, and the like. At the same time, logistically the program has proven successful. That is important important because it is likely to be the primary model for the federal cap and trade that will likely be coming soon.
On that note, congratulations to Connecticut Commissioner of the Dept. of Environmental Protection, Gina McCarthy. Ms. McCarthy was appointed assistant administrator of the EPA’s Office of Air and Radiation where she will be working on the federal cap and trade. I was fortunate enough to hear her speak twice, and both times she was inspiring and hilarious.