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RGGI

The Regional Greenhouse Gas Initiative (“RGGI”, www.rggi.org) is in the final days of preparing for its first auction of emissions allowances which is set for this Thursday, September 25, 2008. The RGGI is the “first mandatory, market-based effort in the United States to reduce greenhouse gas emissions”. Ten states are participating; each of which will sell emission allowances through auctions and invest proceeds to spur innovation in the clean energy economy and create green jobs.

Jeffrey Ball wrote a nice piece about what to expect from the auction in yesterday’s Wall Street Journal. Basically, when RGGI was being planned over the past few years it was anticipated that by the time that RGGI went live emissions would have increased above the “cap” that the permits will set. However, on Thursday when the cap is established the cap will actually be above expected emissions thereby causing RGGI to have no real bite in its first year.

Personally, I believe that this is a good place for RGGI to be. Emissions are expected to be lower than the RGGI cap. First, this is excellent environmentally. Secondly, this will allow RGGI to navigate its first year of operations without having to ‘worry’ about confronting the complex and never-before-attempted-in-the-US issue of dealing with over-emitting. RGGI can therefore invest its first year in learning how to manage emissions, develop successful operating procedures and cultivate relationships.

So when the auction begins on Thursday, I will (A) be glad that Gov. Patrick brought Massachusetts back into RGGI and (B) look forward to the strong future for RGGI.

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