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2nd RGGI program review to consider interactions with CPP

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On 17 November, the Regional Greenhouse Gas Initiative (RGGI) released a list of seven major issues that will be addressed as part of its second program review starting in 2016.

The impact of the Clean Power Plan (CPP) will form a large part of the review, with RGGI states proposing to use their existing Cap-and-Trade program to comply with their assigned mass-based state goals under the CPP. According to targets set by the EPA, a mass-based approach would give the RGGI states a target of 79 million tons by 2030. This is one million tons higher than the current RGGI cap set for 2020 without offsets or allowances from the Cost Containment Reserve (CCR). As the CPP target would be met by the RGGI states ten years earlier, the cap in relation to CPP goals will be a key feature of the review.

The program review will also evaluate its flexibility mechanisms:

(1) The CCR. This holds a fixed supply of allowances that become available for sale when the auction price reaches a certain trigger point (USD 6 in 2015). The review will examine how it has worked to date and how it will interact with the RGGI cap under the CPP.

(2) Offsets. The states are seeking feedback on the future use of offsets given their incompatibility with the CPP. Although no offsets have been issued thus far, RGGI participants are currently allowed to use offsets from five categories to meet up to 3.3% of their compliance obligation.

(3) Control Periods, which are currently three years long, although each installation must hold allowances equivalent to 50% of their obligation for the first two calendar years of the total three year period. 

Other technical design features that RGGI is seeking feedback on include: regulated sources considering RGGI covers more sources than the CPP such as simple cycle and biomass; participation in the EPA’s Clean Energy Implementation Program; possible expansion of RGGI to include other states; and the RGGI system for allowance auctioning and register.

After an initial stakeholder meeting held in New York, three other stakeholder meetings are to be held through summer 2016, before states must submit their final plan for CPP compliance or request an extension from the EPA. 

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