The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions. Ten Northeastern and Mid-Atlantic states haved capped and will reduce CO2 emissions from the [electric] power sector 10% by 2018.

States sell nearly all emission allowances through auctions and invest proceeds in consumer benefits: energy efficiency, renewable energy, and other clean energy technologies. RGGI will spur innovation in the clean energy economy and create green jobs in each state.

Last week, a settlement was reached in a New York state lawsuit regarding the Regional Greenhouse Gas Initiative. Under the settlement, the most populous and third highest per capita carbon emitting state will remain in the accord. This is a positive development which helps ensure the size and future impact of this expanding cap and trade market, which “grew nearly 10-fold from 2008 to 2009, to trade 765 million tons of carbon, worth about $2.5 billion” (WSJ).

In related news, late last year the 10 RGGI states plus Pennsylvania entered into an informal agreement to explore a RGGI like agreement around transporation and heating fuels.