Regulating Imports into RGGI: Toward a Legal, Workable Solution

Columbia Law School - Sabin Center for Climate Change Law White Paper, August 2013

Columbia Public Law Research Paper No. 14-437

32 Pages Posted: 25 Aug 2013 Last revised: 29 Jan 2015

See all articles by Shelley Welton

Shelley Welton

University of South Carolina - Law Library

Michael Gerrard

Columbia University - Law School

Jason Munster

Harvard University

Date Written: August 21, 2013

Abstract

This white paper evaluates the legal workability and constitutionality of what is frequently considered the most feasible mechanism for RGGI to use in regulating imports: an obligation on RGGI “load serving entities” (LSEs) — those companies responsible for supplying electricity to end-use customers — to purchase allowances to account for the emissions associated with the electricity they sell that is imported. Ultimately, although there are many design complexities yet to be worked out, we find that an LSE-centered approach could present a viable pathway forward for RGGI states’ regulation of imports. It is likely to create long-term price signals about the value of clean energy and to help prevent emissions “leakage.” And importantly, an LSE-centered mechanism has a good chance of being found constitutional under the dormant Commerce Clause and Federal Power Act preemption. However, an LSE-centered approach also has some features that may be considered drawbacks: it would likely increase consumer prices within RGGI without sending any immediate price signals to out-of-state generators to incentivize their emissions reductions (instead, such price signals will develop over time as new clean generation and demand-side resources come on-line). Given these features, RGGI states will want to think carefully about whether an LSE-centered imports mechanism accomplishes their goals.

Keywords: climate change, cap-and-trade, dormant commerce clause, Regional Greenhouse Gas Initiative, RGGI, leakage

Suggested Citation

Welton, Shelley and Gerrard, Michael and Munster, Jason, Regulating Imports into RGGI: Toward a Legal, Workable Solution (August 21, 2013). Columbia Law School - Sabin Center for Climate Change Law White Paper, August 2013 ; Columbia Public Law Research Paper No. 14-437. Available at SSRN: https://ssrn.com/abstract=2315207 or http://dx.doi.org/10.2139/ssrn.2315207

Shelley Welton (Contact Author)

University of South Carolina - Law Library ( email )

1525 Senate Street
Columbia, SC 29208
United States
803.777.5662 (Phone)

Michael Gerrard

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

Jason Munster

Harvard University

1875 Cambridge Street
Cambridge, MA 02138
United States

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