Page | 1

 

December 2, 2013

Ms. Regina McCarthy

Administrator

Environmental Protection Agency

1200 Pennsylvania Ave., NW

Washington, DC, 20460

Re: Emission Standards Under Clean Air Act Section 111(d)

Dear Administrator McCarthy:

We applaud the commitment of the United States Environmental Protection Agency (EPA) to 

tackle head-on the challenge of reducing carbon emissions from existing power plants, which comprise 

the nation’s largest source of greenhouse gas emissions. We write to you as commissioners, secretaries 

and directors of environmental or energy agencies of states that participate in the Regional Greenhouse 

Gas Initiative (RGGI) to offer our preliminary recommendations as EPA develops guidelines for state 

programs to reduce carbon dioxide (CO2) emissions from power plants under Clean Air Act section 

111(d). Given the dramatic success of the RGGI states in lowering carbon emissions from power plants 

while at the same time growing our economies, we believe that we have a unique perspective to offer.

We recommend that EPA use its authority under section 111 of the Clean Air Act to ensure 

significant overall reductions in carbon emissions, but to apply the standard in a flexible manner that

empowers states to develop market-based greenhouse gas (GHG) emission reduction programs designed

to work for their region(s). Our experience with RGGI demonstrates that regional cooperation can

achieve the most cost-effective emission reductions, enable a transition to a lower-emitting and more 

efficient power sector and create economic benefits and jobs across the United States. We urge EPA to 

recognize these multiple benefits of RGGI, allow our states to use RGGI as a compliance mechanism, and 

encourage other states to follow suit by participating in RGGI or other regional programs. 
Page | 2

In the attached report and recommendations, we respond to several of the questions posed by 

EPA on September 23, 2013. We also explain the benefits to regional economies, the power sector and 

the environment that can be reaped by allowing a flexible market-based compliance mechanism such as 

RGGI. Finally, we make seven specific recommendations for EPA to develop guidelines under section 

111(d) that will enable all states to achieve significant emission reductions in a cost-effective manner.

Please let any of us know if you have any questions about the information provided. We look 

forward to continuing this dialogue as EPA develops an effective set of emission guidelines.

Sincerely,

Daniel C. Esty

Commissioner

Connecticut Department of Energy and 

Environmental Protection

John W. Betkoski III

Vice Chairman

Connecticut Public Utilities Regulatory Authority

Collin P. O’Mara

Secretary

Delaware Department of Natural Resources and 

Environmental Control

Dallas Winslow

Chairman

Delaware Public Service Commission

David Littell 

Commissioner

Maine Public Utilities Commission

Patricia W. Aho

Commissioner

Maine Department of Environmental Protection

Robert M. Summers, PhD

Secretary

Maryland Department of the Environment

Kelly Speakes-Backman

Commissioner

Maryland Public Service Commission
Page | 3

Ken Kimmell

Commissioner

Massachusetts Department of Environmental 

Protection

Mark Sylvia

Commissioner

Massachusetts Department of Energy Resources

Thomas S. Burack

Commissioner

New Hampshire Department of Environmental 

Services

Robert R. Scott

Commissioner

New Hampshire Public Utilities Commission

Joseph Martens 

Commissioner

New York Department of Environmental 

Conservation

Audrey Zibelman

Chair

New York Public Service Commission

Janet Coit 

Director

Rhode Island Department of Environmental 

Management

Marion S. Gold

Commissioner

Rhode Island Office of Energy Resources

Justin Johnson

Deputy Secretary

Vermont Agency of Natural Resources

James Volz

Chairman

Vermont Public Service Board
Page | 1

Report on Emission Reduction Efforts of the States Participating in the

Regional Greenhouse Gas Initiative and 

Recommendations for Guidelines under Section 111(d) of the Clean Air Act

Introduction

The states participating in the Regional Greenhouse Gas Initiative (RGGI) have 

successfully achieved substantial reductions in greenhouse gas (GHG) emissions from the power

sector in a cost-effective manner, while promoting economic growth and vitality. The 

experience of the RGGI states provides a particularly relevant demonstration of the 

effectiveness of a multi-faceted suite of programs in reducing GHG emissions from the power 

sector. It also illustrates the potential for the power sector to reduce emissions by 

substantially more than 17% from 2005 levels, which will help the United States to achieve the 

targeted economy-wide reductions of 17% by 2020. 

Experience of the RGGI States in Reducing Emissions1

The states involved in RGGI are demonstrating that environmental protection can go 

hand-in-hand with economic development and job creation. In operation since 2009, RGGI is 

the first cap-and-invest program in the United States – it caps GHG emissions from the power 

sector and reduces those emissions over time. The states participating in RGGI are investing 

the proceeds generated from auctioning emission allowances to further reduce emissions, 

lower the cost of compliance, and develop the clean energy economy in the region. 

The RGGI cap-and-invest program is just one of the tools the RGGI states utilize to 

reduce emissions. The RGGI states are promoting renewable energy through some of the 

nation’s most aggressive renewable portfolio standard programs and supporting investments in 

energy efficiency that have reduced the amount of electricity consumed and lowered bills paid 

by electricity consumers. The RGGI states are also implementing various regulatory programs 

directed at pollutants other than GHGs that, along with RGGI, are fostering the transition from 

high-emitting coal and oil to renewable energy and lower-emitting natural gas as a fuel for 

generating electricity. 

 

1 This section responds to many of the questions posed by EPA under heading number 1 (“What is state and 

stakeholder experience with programs that reduce CO2 emissions in the electric power sector?”)
Page | 2

In this context, the RGGI cap-and-invest program plays three integral roles in achieving 

emission reductions. The declining cap and corresponding change in the cost of allowances 

provides a market signal that supports fuel switching, on-site efficiency improvements, the 

retirement of high-emitting plants, the construction of new more efficient plants, and other 

measures that reduce emissions. The auction mechanism provides a source of funding for 

complementary energy efficiency and renewable energy investments that further reduce 

emissions. The enforceable emissions cap ensures that the combined effect of the RGGI 

program and the suite of supporting policies is to actually reduce emissions to below the cap 

level.

The experience in the RGGI states shows the magnitude of emission reductions possible 

from the power sector: a projected 50% decline in tons of carbon dioxide (CO2) emissions and a 

fossil fuel-fired generation fleet that is projected to achieve emission rates on par with the

recently proposed new source performance standard for new electric generating units. 

Between 2005 and 2012, CO2 emissions from the power sector in the nine participating RGGI 

states dropped more than 40%, from 162.5 million tons in 20052to 92 million tons in 2012. The 

RGGI states are locking in this reduction by reducing the regional cap to 91 million tons in 2014, 

and reducing it an additional 2.5% each year thereafter to 78 million tons in 2020. In 2020, the 

RGGI emissions cap will ensure that regional emissions are 50% below 2005 emission levels

(See Figure 1). 

Some of this reduction is attributable to the successful energy efficiency programs 

implemented by each of the RGGI participating states. For example, New York’s energy 

efficiency programs have reduced electricity use in New York by a cumulative total of 6.5% in 

2012. As a result, CO2 emissions associated with New York’s electricity use are estimated to be 

2.68 million tons lower in 2012 than they would have been otherwise. In the four years since it 

began in 2009, Maryland’s EmPOWER program has reduced electricity consumption by 3.25%, 

reducing CO2 emissions by 1.17 million tons. Massachusetts projects that its investment in 

energy efficiency will accelerate the reduction in electricity demand to approximately 2.5% 

each year from 2013-15. From 2005 through 2015, these energy efficiency investments will 

reduce Massachusetts’ electricity demand by 17.1%, for a total annual reduction of 3 million 

tons of CO2 in 2015. Similarly, Connecticut’s energy efficiency programs have reduced electric 

consumption by over 10% since 2001, resulting in a total reduction of over 2 million tons of CO2

emissions.

 

2 http://rggi.org/historical_emissions;

https://rggi-coats.org/eats/rggi/index.cfm?fuseaction=search.rggi_summary_report_input&clearfuseattribs=true
Page | 3

Figure 1: New RGGI Cap and Projected CO2 Emissions Without Cap Reduction

Much of the reduction in power sector emissions is attributable to better utilization of a 

cleaner power system, resulting in a substantially reduced system-wide emission rate. Between

2005 and 2010, the overall CO2 emission rate of the fossil fuel-fired power sector in the RGGI 

states declined from 1,694 lbs/MWh to 1,393 lbs/MWh (1026 lbs/MWh to 841 lbs/MWh,

including zero emission sources).3 By 2020, modeling of the new RGGI cap indicates that the 

fossil fleet emission rate will decline further to 1,028 lbs/MWh (568 lbs/MWh for all sources).4

Thus, in the 15 years between 2005 and 2020, the RGGI states will have achieved a 39% 

reduction in the emission rate from fossil fuel-fired power plants and a 45% reduction in the 

emission rate of the entire power sector. 

 

3 From data used to produce: http://rggi.org/docs/Documents/Elec_monitoring_report_2011_13_06_27.pdf

4 http://rggi.org/design/program_review
Page | 4

Figure 2: RGGI Region Electricity Generation Carbon Intensity Rates

This reduction in the emission intensity of electricity generation in the RGGI states is due 

in part to the ramping up of renewable energy sources, pursuant to state renewable portfolio 

standards that provide for steep increases in the percentage of renewable energy sold in each 

state, as the table below illustrates:

Table 1: RGGI State Renewable Portfolio Standards or Goals

State Target Renewable Portfolio 

Standard or Goal Target Year

Connecticut 27% 2020

Delaware 25% 2025

Maine 40% 2017

Maryland 20% 2022

Massachusetts 15% 2020

New Hampshire 24.8% 2025

New York 30% 2015

Rhode Island 16% 2019

Vermont 20% 2020
Page | 5

As the foregoing demonstrates, the RGGI states’ experience can be an effective model 

for state programs under section 111(d):

It is extremely cost-effective. RGGI enables compliance through market mechanisms 

that seek out the least expensive emission reductions across the region.5

It provides economic benefits. According to an independent analysis, the RGGI 

states’ investment of auction proceeds from just the first three years of the program 

(2009-2011) is creating thousands of jobs, reducing energy bills by over $1 billion 

and adding a net of $1.6 billion to the economies in the RGGI states.6 

It aligns with the regional nature of the electricity grid. The nation’s regional 

electricity grids allow electricity to flow from the cheapest, most efficient producer 

to meet consumer demand, wherever located. As a result, generation and emissions 

within a region may not always trend in unison, such that emission increases in 

some locations due to market fundamentals may be offset by emission decreases 

elsewhere. The RGGI cap ensures that emissions decrease across the region, even as 

it allows increases in some locations in order to reap the benefits of more efficient 

sources in those locations.

It provides a simple, transparent, verifiable compliance system. It can be difficult to 

document and verify the emission reductions attributable to programs that support 

renewable energy and energy efficiency. Under RGGI, the emissions are limited by 

the allowances that are distributed, providing certainty that the projected emission 

reductions will be achieved, including reductions attributable to energy efficiency 

and renewable energy. 

The RGGI market-based model for achieving emission reductions is a well-established 

system of emission reduction. It is based on the models for reducing the pollutants that cause 

acid rain and ozone that are embodied in Title IV of the Clean Air Act and in the nitrogen oxide

 

5 This is consistent with recent analysis of the Organisation for Economic Co-operation and Development (OECD) 

that concludes that carbon markets are a highly efficient mechanism to mitigate carbon emissions. See OECD, 

Climate and Carbon, Aligning Prices and Policies, OECD Environment, Policy Paper, October 2013.

6 The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States, 

Review of the Use of RGGI Auction Proceeds from the First Three-Year Compliance Period. The Analysis Group, 

November 15, 2011. 

http://www.analysisgroup.com/uploadedFiles/Publishing/Articles/Economic_Impact_RGGI_Report.pdf
Page | 6

trading program established by EPA in 1995 and 2003. But RGGI improved on those models by 

auctioning allowances and using the proceeds from those auctions to support complementary 

efforts to further reduce emissions and decrease compliance costs, such as investment in 

renewable energy and energy efficiency. This innovation has reduced the cost of complying

with the cap and provided net economic benefits to the economies of the participating states.

Implications of RGGI for Development of EPA Guidelines under Section 111(d)7

EPA should recognize that the RGGI model is an effective system of emission reduction 

for GHG emissions from the power sector that combines various policy tools with an 

enforceable cap. Under the RGGI regional cap, the RGGI states will achieve a 50% reduction in 

CO2 emissions from the power sector from 2005 levels by 2020. This reduction in emissions is 

projected to be realized in part through a 45% reduction in emission rates across the electricity 

system in the participating states, while the rest of the reductions come from complementary 

policies that reduce demand. Relying on an emission budget trading system, the RGGI states 

are ensuring that this level of reduction will in fact be achieved. The specific lessons of the 

RGGI experience include the following:

1. A system of emission reduction that is focused on the electricity system as a whole 

achieves the greatest emission reductions.

The RGGI states implement a suite of programs to pursue the best opportunities for 

emission reductions from the power sector. Programs within the system of emission reduction 

adopted by each RGGI state, such as energy efficiency goals and renewable energy standards, 

do not require emission reductions at any specific plant but focus on system-wide emission 

reductions. The price signal provided by the cost of RGGI allowances raises the relative cost of 

higher-emitting plants, leading to increased generation at lower-emitting, more efficient plants, 

even as overall system-wide emissions have declined substantially. A system-based approach is

not only best-suited to realize the emission reduction potential of cleaner energy supplies and 

energy efficiency, it fits precisely within section 111(d)’s mandate to EPA to develop guidelines 

for states to implement the “best system of emission reduction.”

 

7 This section responds to EPA’s questions under heading number 2 (“How should EPA set the performance 

standard for state plans?”)
Page | 7

2. The RGGI states are demonstrating the feasibility of reducing emissions by 50%.

Since 2005, CO2 emissions from the power sector have declined more than 40% across 

the RGGI region, as energy efficiency programs have contributed to reduced demand and 

generation has shifted from coal and oil to gas and renewable power. Some states, like New 

York, achieved this level of reduction even though the energy system was already relatively 

clean in 2005, with nearly half of electricity provided by carbon-free sources. Even greater 

reductions should be achievable in states that rely more heavily on coal because of the low-cost 

alternatives that remain available. By reducing the cap to approximately 50% below 2005 levels

by 2020, the RGGI states are ensuring that this transition to a lower-emitting power sector will 

continue. The RGGI states are achieving this reduction while continuing to grow the regional

economy by more than 7% since 2005.

8

Figure 3: RGGI CO2 Emissions and Economic Output (2005-2012)

 

8 Bureau of Economic Analysis (BEA), Gross Domestic Product by State (chained 2005$); 

http://www.bea.gov/regional/index.htm
Page | 8

As mentioned above, the reinvestment of auction proceeds is contributing to this 

economic growth and analyses prepared for the RGGI states predict that over $8 billion and 

more than 125,000 job-years will be added to the RGGI states’ economies as a result of the cap 

reduction through 2040.

9

3. An emissions cap is a reliable system for monitoring and verifying compliance.

For states that rely on a suite of policies to reduce emissions, like the RGGI states, an 

emissions cap is a simple but rigorous method of ensuring and verifying that the policies have 

achieved the emission reductions targeted. Significantly, even though the required emission 

reductions are achieved on a regional basis, the point of compliance is with the source. 

Because sources cannot emit more than the number of allowances they hold at the relevant 

compliance deadline, the RGGI system ensures compliance. Verification is simple and routine: 

at the end of each compliance period, the amount of allowances in each source’s compliance 

account must be adequate to cover that source’s emissions. The measurement of CO2

emissions at sources covered by the cap is easily accomplished utilizing existing emissions 

monitoring equipment and protocols already in place at these sources, and covered sources 

report CO2 emissions in accordance with 40 CFR Part 75. If a source does not have adequate 

allowances to cover its emissions, enforcement can be taken directly against that source. 

Because of the simple and straightforward nature of determining whether the cap is met, 

budget trading programs obviate the need for EPA or states to conduct a complex analysis to 

determine whether a state meets its compliance requirements, as described below. 

 

4. Regional systems of emission reduction best reflect the regional nature of the electrical 

grid.

10

A program that corresponds with the borders of an electricity grid is potentially more 

efficient than programs that are constrained by state borders. If EPA only allows for 

compliance on a state-by-state basis, without regard to the scope of the electricity system, it 

may create inefficiencies and unnecessary complications for EPA, states, and regulated sources. 

A regional program like RGGI helps to ensure that the most cost-effective emission reductions 

occur across the region. For example, since the program was commenced, generation has 

shifted from coal-fired plants within the six state New England region covered by ISO New 

 

9 http://rggi.org/design/program_review

10 This subsection responds to questions about how EPA should account for the regional nature of the electricity 

grid.
Page | 9

England to natural gas and renewable sources located elsewhere in that region. Indeed, 

emissions in Rhode Island actually increased because it is home to some of the more efficient 

natural gas-fired power plants in the region that had excess capacity. If Rhode Island’s 

generation had been constrained by a Rhode Island-specific cap, one or more of the coal-fired 

plants that closed elsewhere in New England may have had to remain open to meet demand, 

thereby increasing emissions and costs to consumers.

Even if a program that encompasses an entire regional program is not feasible, a multistate regional program like RGGI provides greater efficiency by allowing for the most costeffective emission reductions among the states participating in the program.

Recommended Principles for EPA Guidelines11

The RGGI states offer the following recommendations for EPA’s development of 

guidelines for state programs that would deliver the emission reductions needed as costeffectively and equitably as possible.

1. EPA’s Guidelines should achieve meaningful nationwide emission reductions.

In structuring its guidelines, EPA should take account of the emission reductions that are 

being achieved from the electricity system nationwide through a variety of programs, including 

RGGI and California’s similar program, investments in energy efficiency, renewable energy 

programs, and switching to lower-carbon fuels, and also consider the potential for 

contributions from available technologies that are not yet widely deployed in the United States, 

such as offshore wind and carbon capture and sequestration technology. EPA should recognize 

that the best system of emission reduction considers the electricity system as a whole, and 

utilizes all the opportunities for reducing emissions from this system.

Conceptually, the methods of reducing emissions from the fossil fuel-fired electricity 

system can be grouped into two categories. The first category consists of systems of emission 

reduction that reduce the amount of electricity needed from fossil fuel-fired power plants, such 

as energy efficiency programs that reduce the demand for electricity, demand-side

 

11 This section responds generally to EPA’s questions under heading numbers 2 (“How should EPA set the 

performance standard for state plans?”) and 3 (“What requirements should state plans meet, and what flexibility 

should be provided to states in developing their plans?”).
Page | 10

management, and investments in renewable energy that displace fossil fuel-generated 

electricity. Second, emissions can be reduced by lowering the carbon intensity of the electricity 

generated by fossil fuel-fired power plants. This is done through shifting generation from highemitting plants to new or under-utilized lower-emitting plants, and using the latest technology 

to reduce emissions at existing plants. 12

Combined, these two categories, or wedges, of emission reductions can be substantial. 

The RGGI states’ 40% emission reduction is due to a suite of actions that address both wedges,

including the RGGI mechanism, investments in energy efficiency and other demand-side 

programs, support for renewable energy, and regulatory programs directed at criteria air 

pollutants and air toxics that have reduced the amount of electricity generated by higheremitting plants. These programs have combined with market forces that have supported a 

major shift in electricity generation from coal-fired to natural gas-fired plants to transform the 

regional electricity system in the past eight years. 

By investing in energy efficiency and renewable energy and shifting generation to more 

efficient plants, other states and regions should be able to approach the level of performance 

that the RGGI states are already demonstrating. EPA should evaluate whether and when this 

level of performance can be achieved throughout the United States using the various tools at 

the disposal of the states. While it may take longer for some regions of the nation to achieve 

comparable levels of performance, EPA should structure the emission guidelines to require that 

states make significant progress in the next decade toward achieving the reductions and 

performance level demonstrated by RGGI to be readily achievable by the best systems of 

emission reduction.

 

12 Currently available options for reducing carbon dioxide emissions through measures implemented “on-site” at 

existing fossil fuel-fired power plants have the potential to reduce emissions from individual power plants by 20% 

or more, especially if used in combination. In addition to improving the efficiency or “heat rate” of the plant, these 

options include, but are not limited to, co-firing or re-powering with lower-carbon fuels such as sustainable 

biomass and natural gas; utilizing renewable energy sources such as solar power to provide supplemental steam 

heating; implementing combined heat and power (CHP) systems at plants near industrial facilities or district 

heating systems; and carbon capture technology.
Page | 11

Figure 4: Illustrative Example of Factors Driving CO2 Emission Reductions

2. EPA should provide equitable treatment to early movers.

Many states, including the RGGI states, have already made substantial progress in 

reducing emissions from their power sector. EPA should structure the guidelines in a way that 

recognizes this progress and provides equitable treatment to those states. EPA should avoid 

any approach that imposes inequitable or disproportionate burdens on early mover states and

fails to recognize their substantial progress. For example, requiring an equivalent percentage 

reduction for state A, which has already achieved most cost-effective reductions, and state B, 

which has taken little action and finds many inexpensive emission reduction opportunities still 

available, would effectively disadvantage state A for having taken early action.

One approach that EPA should consider is setting a single emission intensity target (e.g.,

a system-wide average of 1100 lb/MWh) that would apply to each state, individually or as part 

of a region. That approach would require all states to reduce emissions but it would be 

equitable to those states that have already made progress toward meeting the emission 
Page | 12

intensity target. EPA could consider providing more time to states that have more work to do 

to meet the target.

3. EPA should allow states to use a mass-based system of compliance.

A mass-based approach has a number of advantages, including simplicity and its ability 

to accommodate many emission reduction strategies, including energy efficiency and 

renewable power, and add-on controls should they become technically and economically 

viable. An emission rate target, in contrast, does not easily provide credit for energy efficiency 

investments that reduce energy demand without reducing the emission rate of the units 

operating. Thus, requiring the regulated fossil fuel-fired power plants to meet a specific 

emission rate, or achieve a set reduction in their emission rate, does not credit investments in 

energy efficiency.

Therefore, EPA should allow states to utilize a mass-based system of compliance, 

applied to the energy system as a whole. Indeed, if EPA does not establish mass-based targets 

in its guidelines, it should provide the states with clear direction in developing mass-based 

emission budgets based on emission rates designated by EPA. That direction could include 

designation of factors (e.g., rate of economic growth) and consistent data sources that would 

allow for conversion of an emission rate target into an emission budget. 

4. EPA should allow states to demonstrate compliance on a regional basis.

EPA should allow and encourage compliance on a regional basis, while providing 

individual states the opportunity to determine how to achieve compliance with each state’s 

emission budget within its state implementation plan. Under a mass-based regional system of 

compliance like RGGI, states would pool their individual state emission budgets and comply

with those emission budgets on a regional basis, while still allowing for enforcement by states 

against their own sources that do not have sufficient allowances. As long as the overall regional 

emissions cap complies with the guidelines, it should be immaterial to EPA how the 

participating states elect to apportion the regional emissions cap among the states. Although a 

particular state’s actual emissions could theoretically exceed its individual state emission 

budget in a particular year, this should not affect EPA’s willingness to accept a regional program 

as a pathway for compliance. As long as the regional program demonstrates that emissions 

from sources within the region will collectively meet EPA’s emission guideline, it can still serve 

as the basis for each state’s implementation plan. 
Page | 13

A regional program has the benefit of addressing some of the interstate issues raised by 

EPA in its questions. For example, under a state-by-state approach, if an energy efficiency 

policy in State A leads to a reduction in emissions in neighboring State B, State A cannot 

necessarily take direct credit for those emission reductions outside its borders in its section 

111(d) implementation plan. Likewise, because State B would have no basis for enforcing State 

A’s energy efficiency program, State B cannot necessarily include State A’s efficiency policy in 

its plan. For any state that is part of a multistate electricity grid, it may be challenging to make 

a rigorous demonstration that investments in energy efficiency or renewable energy result in 

any quantifiable level of emission reductions within the state. On the other hand, a regional 

program that encompasses both the state that invests in efficiency and the state in which

emissions decline as a result would avoid these complications. In a regional budget trading 

program, emission reductions anywhere in the region reduce the overall demand for emission 

allowances, as regulated sources require fewer allowances for compliance. As a result, the cost 

of allowances, or the cost of complying with that regional emissions cap, is reduced. 

Thus, allowing regional compliance can avoid market distortions that would result in less 

than optimal policy decisions. For example, a state that is not participating in a regional 

program might choose not to invest in energy efficiency or renewable energy if it would not be 

able to fully credit the benefits of doing so in its section 111(d) compliance plan. Instead, it 

might choose to make less than optimal investments in fuel-switching or plant-specific

improvements in order to ensure that the emissions of its power plants are reduced. The result 

would be less than optimal allocation of limited resources and less reduction of emissions for a 

given level of effort. EPA should avoid that inefficient outcome by supporting (but not 

requiring) the development of regional compliance plans. 

5. EPA should permit states to demonstrate compliance on a multi-year basis.

Emissions across an electricity system can vary between years depending on factors

outside the ability of plant operators to influence, including weather, economic conditions, and 

unexpected shutdowns. EPA can require a more substantial level of cost-effective reductions if 

it allows states to average emissions over a multi-year period and enables states to bank, or 

carry-over, early reductions. Unlike other pollutants that may have short-term impacts, the 

environmental harm caused by CO2 and other GHG pollutants have much longer periods of 

impact. Therefore, allowing compliance on a multi-year basis would not reduce the 

environmental benefits of the program.
Page | 14

 The RGGI program uses a three-year compliance approach. The RGGI states’ experience 

is that this approach has the benefit of allowing sources to take advantage of multi-year 

compliance strategies. By allowing sources three years, the regulated units have flexibility to 

address variations in emissions, unexpected shutdowns, or uneconomic dispatch orders, 

without impacting the enforceability or environmental effectiveness of the program’s 

requirements.

6. EPA’s should provide clear guidelines for a rigorous demonstration of equivalency of 

state programs.

13

EPA should provide clear direction to the states regarding demonstrating equivalency of 

state programs. EPA’s guidelines should identify the tools that states can use to demonstrate 

that state emission reduction programs will achieve equal or greater reductions in pollution 

than the base standards set by EPA. For a mass-based budget trading program like RGGI, that 

process is straightforward. As long as EPA provides a mechanism that enables states to 

potentially have an annual mass-based emissions budget under section 111(d), then 

determining whether a regional budget trading program like RGGI is equivalent to EPA’s 

emission guideline will be a simple matter. In particular, the participating states will have to 

demonstrate that the annual regional emissions cap under the regional program achieves 

emission reductions equal to or greater than those allowed by EPA’s guidelines.

To evaluate programs that are not mass-based, EPA should build on current program 

evaluation guidance such as the “Roadmap for Incorporating Energy Efficiency/Renewable

Energy Policies and Programs into State and Tribal Implementation Plans” or the “State and 

Local Energy Efficiency Action Network. 2012. Energy Efficiency Program Impact Evaluation 

Guide.” These guides describe the terminology, structures, and approaches used for evaluating 

energy and demand savings as well as avoided emissions and other non-energy benefits 

resulting from energy efficiency programs that are implemented by local governments, states, 

utilities, private companies, and nonprofits. These guides provide context, planning guidance,

and discussion of issues that determine the most appropriate evaluation objectives and best 

practices approaches for different efficiency portfolios. By using standard evaluation 

terminology and structures and best practices approaches, evaluations can support the 

adoption, continuation, and expansion of effective efficiency actions for consistent inclusion in

State Plans.

 

13 This section responds to EPA’s questions under heading number 3 (“What requirements should state plans 

meet, and what flexibility should be provided to states in developing their plans?”).
Page | 15

7. EPA should ensure that state plans are enforceable.

EPA should require state plans to demonstrate that the requirements are legally and 

practically enforceable. Under a budget trading program like RGGI, enforceability, 

measurement, and verification are already incorporated into the program in a straightforward 

manner. Based on consistent regulations adopted in each RGGI state, sources subject to RGGI 

are required to obtain and hold a sufficient amount of allowances by the relevant compliance 

deadline to cover emissions over the relevant compliance period. Under the existing terms of 

RGGI states’ respective implementing regulations, this regulatory requirement is generally 

incorporated as a condition of each source’s operating permit. Thus, RGGI is enforceable 

directly against individual sources by the state where the sources are located, and the failure of 

a source to hold sufficient allowances constitutes violations of the state’s program and of the 

source’s permit. Under an approved section 111(d) plan, this obligation of each individual 

source to comply with RGGI would become a federally enforceable condition of an individual 

source’s Title V permit. At the end of the compliance period, the “true-up” process, in which 

states deduct allowances to cover sources’ emissions, provides verification that the emission 

reductions included as part of the participating states’ section 111(d) plans are actually 

achieved.

State plans that rely on a suite of strategies including energy efficiency, renewable 

energy, and changes in dispatch should be encouraged, as long as a mechanism is available to 

ensure that the promised emission reductions are achieved. If the emission reductions 

anticipated from those strategies are encompassed within a federally enforceable emission 

budget program, the various strategies themselves would not have to be federally enforceable.

Conclusion

The states participating in RGGI have demonstrated that significant emission reductions 

are feasible through a suite of clean energy activities, complemented by an enforceable 

emissions cap. EPA should consider this record of success in developing guidelines for state 

plans that require and empower states to achieve meaningful reductions through a 

comprehensive package of activities, including market-based emission budget programs like 

RGGI.