1. Northeast Regional Greenhouse Gas Initiative
Presentation to
The Electric Restructuring Roundtable By
David O’Connor
Commissioner
Massachusetts Division of Energy Resources
May 21, 2004

2. Regional Greenhouse Gas Initiative (RGGI)
A cooperative effort by Northeastern and Mid-Atlantic states
Seeks to reduce carbon dioxide emissions while maintaining affordability and reliability of electricity
Initial focus is the implementation of a multi-state cap-and-trade program for emissions from power generation
After initial phase is implemented, the states will consider developing programs for other sources.

3. Participation
Participants: ME, NH, VT, MA, RI, CT, NY, NJ, DE & District of Columbia
Observers: MD, PA, New Brunswick, Quebec & Eastern Canadian Premiers
Stakeholder Group
Resource Panel

4. Stakeholder Group Electric generators Electric distribution companies
Energy efficiency advocates
Renewable energy developers
Industrial & Commercial energy users
Consumer interest organizations
Environmental organizations

5. Resource Panel ISOs: New England, New York, PJM
Research organizations: WRI, Pew, RFF
Emissions traders: Natsource
Energy assistance: Regulatory Assistance Project
Environmental assistance: NESCAUM

6. Program Design Principles
Model mechanics on other successful cap and trade programs
Seek uniformity across states to facilitate inter-state trading of allowances
Be expandable and flexible, permitting other states to join in
Avoid interference with other emission trading programs and initiatives

7. Potential Applicability
For initial phase, focus is on electricity generating units larger than 25 MW
Over 95% of GHG emissions come from units larger than 25MW
Units have better historical data than smaller units
Second phase will consider applicability to:
Electric generators smaller than 25MW
Municipal solid waste combustors
Biomass-fired units
Large industrial boilers

8. Economic Modeling
Model the impacts over a 12 state region with individual inputs for 53 sectors in each state
Estimate contributions from energy efficiency and renewable energy
Outputs will include predicted impacts on personal income, gross state product, employment, imports, industrial sector consumption/production
Estimate corollary benefits for public health

9. Scenarios to be Modeled
Benchmark and Reference Case
Cap Levels and Trading Rules
Policy, Structure, and Flexibility Options
Model Rule Scenario

10. Quantifiable Impacts Other emissions Electricity prices
Carbon emissions
Other emissions
Electricity prices
Total electricity system costs
Fuel use and diversity
Reliability
Imports and exports of electricity

11. Key Issues
What factors to consider in setting cap levels to model and, ultimately, to recommend?
What assumptions should be used to model benchmark scenario and reference scenario?
Should reductions from sources not covered by the cap qualify for credit? If so, what sources?