Why Have Greenhouse Emissions in RGGI States Declined? An Econometric Attribution to Economic, Energy Market, and Policy Factors

Abstract

The Regional Greenhouse Gas Initiative (RGGI) is a consortium of Northeastern U.S. states that limit carbon dioxide emissions from electricity generation through a regional emissions trading program. Since RGGI started in 2009, regional emissions have sharply dropped. We use econometric models to quantify the emissions reductions due to RGGI and those due to other factors such as the recession, complementary environmental programs, and lowered natural gas prices. The analysis shows that RGGI has induced greater emissions reductions within the region than have been achieved proportionally in the rest of the United States, though some extramural leakage may have occurred.