On 23 August 2017, the Regional Greenhouse Gas Initiative (RGGI), a compact of nine Northeastern and Mid-Atlantic U.S. states, announced in a press release that the participating states had agreed on draft program elements that will guide the program between 2020 and 2030. A key element of the draft program is a further reduction of the emissions cap to 30% below 2020 levels. The RGGI states will hold a public meeting in Baltimore, Maryland, on 25 September to hear stakeholder comments on the draft program elements, for which meeting materials are available on the program’s website. After consideration of stakeholder comments and final economic analyses, a revised Model Rule will be released. Changes in the revised Model Rule must then be implemented by the participating states.

Other key elements include the creation of an Emissions Containment Reserve (ECR), modifications to the Cost Containment Reserve (CCR) and adjustments to the RGGI cap to account for excess unsold allowances that have been banked up to 2020.

The ECR is an automatic adjustment mechanism that would start operation in 2021, adjusting the cap downward in the face of lower-than-expected costs. Under the ECR, participating states would withhold allowances from auction if prices fall below a specific threshold. The proposed ECR trigger price would start at USD 6, rising by 7% annually thereafter. Allowances withheld will not be reoffered for sale, thereby adjusting the cap downward. Maine and New Hampshire do not intend to implement the ECR at this time.

Trigger prices for RGGI’s Cost Containment Reserve, which is triggered when allowance prices surpass a pre-established threshold and releases additional allowances into the market, were proposed for the 2020-2030 phase. They would start at USD 13 in 2021, also rising at 7% annually thereafter. 

Together, those two reserves would create a price band between USD 6 and USD 13, both increasing at 7% annually.