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The Case for an Economy-Wide Cap-and-Invest Initiative

Mary Sprayregen, Deputy Director of Policy and Public Affairs -

In the ten years since its launch, the Regional Greenhouse Gas Initiative (RGGI) has demonstrated the strength of the cap-and-invest approach. RGGI member states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) have cut greenhouse gas (GHG) emissions and grown their economics at significantly higher rates than those in most non-RGGI states. Powerful as RGGI’s electric sector focus is, however, it will not be enough to make the gains needed to combat climate change. It is time for RGGI to expand its mission by targeting all sources of emissions in an economy-wide approach.

RGGI States Can Lead the Way

A comprehensive GHG market, ideally leading to a national or even global scale, is widely agreed to be the most efficient way to reduce global emissions. RGGI member states are particularly well-positioned to lead such an effort and to benefit from it. These states have consistently demonstrated a commitment to tackling climate change and have paved the way for other states and provinces to achieve emission reductions. They also have established high emission reduction goals -- some set into state law -- which an economy-wide approach would serve. Lastly, they share a common opportunity in a non-electric emission sector untouched by the RGGI strategy.

  • Most member states have developed aggressive GHG reduction goals that go beyond RGGI goals and GHG reduction targets in the U.S. Environmental Protection Agency’s Clean Power Plan.
  • Governors of two RGGI states – Vermont and Connecticut -- have signed onto the Climate Summit of the Americas’ Climate Action Statement, calling for GHG pricing to encourage emission reductions.
  • Four of the nine RGGI states have codified their GHG reduction goals in statute.
  • RGGI states share a tremendous non-electric sector opportunity; electricity generation accounts for just 20 percent of the region’s emissions.
  • The concept behind RGGI has been replicated in California and has inspired the Western Climate Initiative (WCI).

Bringing all emissions into an economy-wide cap-and-invest program will enable RGGI states to meet their climate goals, clearly establish economic signals to emitters, adhere to statutes, and fund rapidly scalable clean energy programs.

The Economy-Wide Approach

The economy-wide approach is already a proven strategy. The RGGI-inspired WCI is North America's finest example of a comprehensive cap-and-invest program, reducing emissions not only from the electric sector but also from transportation and heating fuel sectors. The WCI emissions cap covers sources responsible for approximately 85 percent of California’s GHG emissions.

In the first year of WCI’s expansion to an economy-wide program (fiscal year 2015/2016), California was able to raise $2.237 billion in cap-and-invest revenue, which is a one-year increase of 168 percent. California’s experience with WCI suggests that RGGI – which brought in more than $435 million in 2015 – would raise well over a billion dollars annually with an economy-wide approach.

Because the RGGI and WCI markets are already in place and working effectively, linking the two would allow for significant new GHG emission reductions without creating a new system or mechanism. Quebec did just that, in 2014, when it linked its cap-and-invest system to California’s.

The Path Forward

Forging an economy-wide cap-and-invest path – whether in RGGI member states, the nation, or the world -- will require capital, political courage, and tremendous effort. Consideration of this approach raises challenging questions that deserve a conversation involving political leaders, advocates, and professionals on the front lines of the proposed market solutions. Covering all major sources of emissions under a cap-and-invest strategy is the next logical step for a brighter, better energy future.

Read the full white paper: The Case for an Economy-Wide Cap-and-Invest Initiative: Why the Northeast and Mid-Atlantic Should Take the Lead.

Mary Sprayregen joined VEIC in 2015 as its Deputy Director of Policy and Public Affairs. She has spent over a decade working on energy policy from state-level advocacy to advising a member of the U.S. House of Representative’s Energy and Commerce Committee. Most recently, Mary served as Con Edison’s federal lobbyist in Washington, D.C. Mary holds a B.A. in Sociology from Skidmore College.

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