Unilateral Incentives to Self-Impose Emission Limits: Is There a Case for Pennsylvania and RGGI

In this project, researchers look at Pennsylvania's incentives to join the Regional Greenhouse Gas Initiative (RGGI). RGGI is a CO2 emissions allowance program that covers Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. For these states, an annual cap on CO2 emissions is set, and this determines the number of allowances to be introduced in the market. Polluting sources in the power sector are required to surrender an allowance for each ton of  CO2  they emit. Allowances are released via auctions (contrary to the Acid Rain Program where allowances were mostly allocated for free), and participants can also buy and sell in secondary markets. Pennsylvania is not currently part of RGGI, although there have been recent discussions about potential entry spurred by the anticipated failure of the CPP.

Research Questions:

  • Whether it will be beneficial for consumers and/or firms within Pennsylvania to join RGGI?
  • What is the impact of Pennsylvania's decision to join on the other PJM states?
  • What is the impact on both PJM and RGGI states?