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February 14th, 2013

Northeast Carbon Cap Reduction Proposed: Valentine Folly or Gift?

by Andrew Price, President & COO

The Regional Greenhouse Gas Initiative (RGGI) is looking for some love this Valentine’s Day for its plan to reduce allowable carbon dioxide emissions by 45%. The cap on emissions would be reduced from the current 165 million short tons to 91 million short tons in 2014. The cap would fall by an additional 2.5% in 2015 and each year thereafter through 2020. Although a 45% reduction in a single year may seem like a very large request, even on Valentine’s Day, the proposed cap is set about equal to current emission levels. The price of RGGI carbon allowances has traded near the regulatory floor price of $1.93 per short ton for many years, due to a cap that has been far above actual emissions.

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