What rejoining RGGI means for New Jersey solar

By Ben Delman on August 19, 2018

The Regional Greenhouse Gas Initiative (RGGI) is a 2005 compact signed by ten northeastern and mid-Atlantic states to limit the amount of carbon they produce. New Jersey was an original signatory, but left in 2012. An executive order signed by Governor Murphy in January means New Jersey will be rejoining RGGI soon. Doing so will create a financial surplus that can be used to expand access to solar for more New Jersey residents.

Each state that participates in RGGI (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont currently) has passed legislation that puts a limit on how much carbon power plants in their states can produce. Power plants over a certain size, 25 MW, must purchase allowances in order to emit carbon. These purchases are made at quarterly auctions. The more a power plant wants to emit, the more that it has to spend to purchase allowances.

The sale of these permits is then used to invest in technologies and programs that reduce carbon pollution. States decide individually how the proceeds from their auction will be spent. Examples include spending on programs to help homeowners go solar, energy efficiency projects, and bill credits for low-income households.

“Renewables and efficiency benefit more from state policies that are complementary to RGGI,” said Mark Drajem of the Natural Resources Defense Council. Drajem said the proceeds from RGGI sales help level the playing field. Between 2005 and 2015, RGGI estimates the agreement saved consumers more than $2 billion dollars in lower electric bills.

“New Jersey rejoining RGGI will impact the other states by creating a larger market, which means more opportunity to find the lowest cost opportunities to reduce pollution, lowering costs for everyone,” Drajem said.

New Jersey’s decision to rejoin RGGI comes as the state has made a significant commitment to pursue more solar. RGGI money could be deployed to aid this pursuit in areas like community solar and assistance to support solar adoption in low-income areas.