Association for Public Policy Analysis & Management

There is substantial evidence of an association between greenhouse gas emissions and a warming global climate. A warming planet has implications for human health, agriculture, and economic growth. There are several policy strategies to reduce greenhouse gas emissions. One solution is a cap and trade system, which is a market-based instrument that sets an upper limit on emissions and allocates a certain number of permits to pollute to participating firms, which they can trade with other firms. The Regional Greenhouse Gas Initiative (RGGI), established in 2005 and implemented in 2009, was the first mandatory cap and trade program in the United States designed to mitigate greenhouse gas emissions from the electricity sector. This paper attempts to understand whether RGGI has been effective in reducing greenhouse gas emissions from power plants. I use annual power plant-level emissions data from the EPA’s eGRID database to estimate a difference-in-differences model that compares changes in carbon dioxide emissions between plants in participating states and in non-participating states from 1996 to 2016. Preliminary results suggest that there is a significant difference between the rate of change of carbon dioxide emissions from plants in RGGI states and non-RGGI states.