Will States Joining RGGI Use More Natural Gas and Less Coal to Generate Electricity?

Originally published for customers April 29, 2022.

What’s the issue?

The Regional Greenhouse Gas Initiative (RGGI) is a program that began in 2009 among ten Northeastern states, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont, to cap and reduce CO2 emissions from electric generation facilities.

Why does it matter?

Soon after it was formed, RGGI experienced the fickleness of political changes when Governor Christie in New Jersey decided that he would pull the state out of RGGI at the end of 2011. Then, as of January 1, 2020, New Jersey rejoined the group. Virginia joined the initiative in 2021, but the new governor elected that year announced he would seek to withdraw the state from RGGI. Similarly, Pennsylvania has announced it would be joining RGGI, but that decision, which is driven by the current governor, has been challenged in court and may be reversed even by the governor’s chosen successor.

What’s our view?

Some have questioned whether RGGI has directly resulted in any reduction in carbon emissions, but what is clear is that in the states that have always participated in RGGI, almost all coal-fired power plants have been replaced, generally with a mix of natural gas-fired power and wind and solar. Three states have joined RGGI since 2020, with Pennsylvania joining just this month. Based on the data from the ten states that have always been in RGGI, there is a strong correlation between membership and the retirement of coal-fired facilities, which could benefit natural gas-fired plants and natural gas producers. However, the continued participation of Virginia and Pennsylvania remains an open question due to the political winds in both states.

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