The Economic Impacts of the Regional Greenhouse Gas Initiative on Northeast and Mid-Atlantic States
In 2009, ten Northeastern and Mid-Atlantic states launched the Regional Greenhouse Gas Initiative (RGGI), the nation’s first market-based cap-and-invest program to reduce emissions of carbon dioxide (CO2) from existing and new power plants. RGGI is important as a stand-alone program given its significant scope, as the participating states account for more than one-seventh of the US population and more than one-sixth of US GDP. Insights and observations from RGGI are also valuable to other states considering cap-and-invest programs to reduce CO2 emissions.
As part of the RGGI Project Series of independent and nonpartisan research and analysis projects, Analysis Group examined the RGGI states’ experience during the past four compliance periods (2009–2011, 2012–2014, 2015–2017, and 2018–2020). The resulting reports – released in 2011, 2015, 2018, and 2023 – analyze in detail the economic effects of RGGI on participating states.
The Analysis Group teams – which included Managing Principals Pavel Darling and Andrea Okie, Principal Paul Hibbard, and Senior Advisor Susan Tierney, among others – found that the states experienced economic benefits in all four compliance periods, while simultaneously reducing CO2 emissions and local air pollution. Over the entire study period from 2009 to 2020, the studies found that RGGI contributed to a 46% reduction in carbon emissions, raised $3.8 billion in allowance proceeds, produced $5.7 billion in net economic benefits, and added 48,000 job-years.
In Analysis Group’s 2023 report, Associate Daniel Stuart and Mr. Hibbard also addressed environmental justice (EJ) concerns, in addition to quantifying the initiative’s ongoing economic and environmental benefits. The report presented a range of policy options that could help RGGI’s benefits reach overburdened communities, such as data collection, pollutant monitoring and modeling, and spending initiatives using RGGI allowance revenues.