Emissions Trading Worldwide

plans to the EPA indicating how each state intends to implement
the CPP. If enough states express interest, it is possible that these
submissions will ultimately lead to the formation of a national carbon
market.
“While states are not obliged to implement
an ETS, the EPA will allow states to form
linked or multi-state programs, regardless
of whether they are neighbors or share a
common electricity market.”
Conclusion
The ETS concept originated in the U.S., and RGGI is one of the first
ETS in the world to address carbon dioxide emissions. Informed
by a robust stakeholder process, the RGGI states intend to maintain
their leadership role by updating the RGGI program to address
the CPP’s requirements, provide a model for other states, allow for
an expanded carbon market, and support economic growth. The
EPA’s finalization of the CPP, including support for the creation of
RGGI-like systems in other U.S. states, represents significant progress
for RGGI and U.S. climate policy.
ICAP members may be particularly interested in how discussions
about expanding emissions trading beyond RGGI and
California are informed by technical knowledge on ETS design.
From an academic perspective, expansion would be a positive
development as it is well known that larger markets can deliver
more emissions reductions at lower costs. On the other hand,
issues that have been discussed in the context of linking may
pose challenges, particularly when one considers the diversity of
U.S. states with respect to size and power generation resources.
While states are not obliged to implement an ETS, the EPA will
allow states to form linked or multi-state programs, regardless of
whether they are neighbors or share a common electricity market.
Therefore, the size and configuration of any ETS that may be used
to comply with the CPP is uncertain and will remain so for some
time. It will be a busy year for regulators, stakeholders, and academics
that wish to provide input, with resources such as ICAP’s
annual reports providing valuable evidence of the viability and
adaptability of Emissions Trading Systems.
“Informed by a robust stakeholder
process, the RGGI states intend to maintain
their leadership role by updating
the RGGI program to address the CPP’s
requirements, provide a model for other
states, allow for an expanded carbon
market, and support economic growth.”
international carbon action partnership
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