Regional Greenhouse Gas Initiative

an initiative of the Northeast and Mid-Atlantic States of the U.S.

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Offset Requirements

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The RGGI States rely upon prescriptive, category-specific regulatory requirements for determination of offset project and the award of CO2 offset allowances.

These requirements were developed to ensure that offset projects represent CO2-equivalent emissions reductions or carbon sequestration that is real, additional, verifiable, enforceable, and permanent. At this time, five project categories may be eligible for the award of CO2 offset allowances: 


Consistency, Monitoring and Verification Requirements

Applying for the award of CO2 offset allowances involves a two-step process. 

First, the sponsor of a proposed offset project ("project sponsor") must submit a Consistency Application to demonstrate that the project meets the relevant state regulatory requirements. Consistency Applications must be submitted to the RGGI State where the majority of CO2-equivalent emissions reductions or carbon sequestration is expected to occur. 

Projects that have been deemed consistent with state regulatory requirements must submit ongoing monitoring and verification reports demonstrating the achievement of CO2-equivalent emissions reductions or carbon sequestration prior to any award of CO2 offset allowances by a RGGI State.



Key regulatory components include provisions that address project "additionality," emissions baselines and emissions reductions, and project monitoring and verification. Regulatory requirements are established in state regulations, which were developed based on a Model Rule. RGGI States have promulgated materially consistent regulations, ensuring comparable offset quality across the region and fungibility of CO2 offset allowances.

Additionality addresses whether greenhouse gas emissions reductions will be achieved from an offset project that would not otherwise have occurred in the absence of the offsets program.  Additionality is the key criteria for ensuring that offsets projects result in real emissions reductions in the context of a cap-and-trade program. Since CO2 offset allowances allow an additional ton of CO2 to be emitted by a regulated power plant for each ton reduced through the offset project, projects must provide assurance that they are achieving emissions reductions that would not otherwise have occurred in the absence of RGGI's offset provisions.

State regulations employ both general and category-specific provisions addressing project additionality.  Offset projects may not involve activities that are required by law, regulation, or administrative or judicial order.  Offset projects may not receive incentives from programs funded through RGGI auction proceeds or programs funded through electricity or natural gas ratepayers.  In addition, projects must also meet category-specific benchmarks and performance standards designed to ensure that approved offset projects represent activities that significantly exceed standard market practice.

For further information, consult the offsets section of the Model Rule (which served as the basis for the development of state regulations), and state regulations.