State and Local Policy Database

Carbon Pricing Policies

As a method of reducing greenhouse gas emissions, carbon pricing policies aim to put a price on carbon, the idea being that if emitting GHGs increases costs, then the market will find a way to reduce emissions at the lowest possible cost. Two main types of pricing are generally used: carbon tax and cap-and-trade. A carbon tax charges a fee for each unit of CO2 (typically a tonne) that is emitted. Cap-and-trade sets a limit on the amount of CO2 that can be emitted while issuing permits or certificates that allow for CO2 emission beyond the cap. These certificates can then be traded between owners to find the lowest-cost emissions available. Energy efficiency plays an important role in the successful implementation of carbon pricing policies. Specifically, investing the funds collected from these policies in energy efficiency can help achieve net economic benefits by reducing energy use, energy bills, and energy-related emissions, thus cushioning the effect of a carbon-priced program on energy costs.

The State of Alabama does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Alaska does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Arizona does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Arkansas does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

California’s AB 32, adopted in 2006, authorized the California Air Resources Board (CARB) to establish a cap-and-trade program for greenhouse gas emissions. The program covers entities responsible for emissions of at least 25,000 tonnes per year. Most allowances are auctioned; 15% of allowances are given freely to either utilities or the industrial sector. Those given to utilities must be consigned to the auction, with proceeds used to benefit ratepayers. The program was officially implemented in 2013, initially covering only the power sector. However, in 2017, the state extended the program to 2030 and added the transportation sector and use of natural gas outside the power sector. About 9% of collected funds were re-invested in energy efficiency in 2017, not including the substantial investments that also went toward low-carbon vehicles and public transportation in the transportation sector. The state met its 2020 emissions target in 2016.

Last Reviewed: July 2019

The State of Colorado does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

Connecticut is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Connecticut collects RGGI dollars that are used for energy efficiency. In general, allocations by funding are 69.5% for energy efficiency (about $128,844,107), 23% for clean energy (about $43 million, and could include some efficiency measures), and 7.5% is retained by DEEP (Conn. Agencies Reg. Section 22a-174-31(f)(6)). These figures are 10 year period to 2019. A portion of the efficiency funds are allocated to municipalities.

Connecticut is also a participant in the Transportation and Climate Initiative’s effort to develop a cap-and-invest program for transportation emissions. This team is engaged in modeling, outreach, and program development efforts and is targeting December 2019 for announcement of potential program design.

Last Reviewed: July 2019

Delaware is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Delaware utilizes 65% of its RGGI proceeds on energy efficiency activities, administered through the Delaware Sustainable Energy Utility. 10% of proceeds is dedicated to the Delaware Weatherization Program for weatherizing low- and moderate-income homes. 5% is returned directly to ratepayers through the Low Income Heating and Energy Assistance Program. 10% is dedicated to other programs that reduce greenhouse gas emissions, and 10% is used for administration and policy development efforts. In 2018, Delaware received $12,193,223.38 in RGGI auction proceeds.

Total investments can be found in RGGI annual proceed reports, in the Delaware chapter. The latest available data is for calendar year 2016.

Delaware is also a participant in the Transportation and Climate Initiative’s effort to develop a cap-and-invest program for transportation emissions. This team is engaged in modeling, outreach, and program development efforts and is targeting December 2019 for announcement of potential program design.

Last Reviewed: July 2019

The District of Columbia does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Florida does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Georgia does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Hawaii does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Idaho does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Illinois does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Indiana does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Iowa does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Kansas does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Kentucky does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Louisiana does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

Maine is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Last Reviewed: July 2019

Maryland is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Maryland's proceeds from RGGI get invested in the Strategic Energy Investment Fund (SEIF). Since inception in 2008 (and through the most recent RGGI auction), Maryland has received over $642 million of revenues from the auction of RGGI carbon allowances for use in its Strategic Energy Investment Program. The most recent version of the RGGI report (covering 2008 through 2016) shows 26.6% of Maryland's SEIF funds were ultimately directed towards energy efficiency. In FY18, total Maryland SEIF revenues were approximately $48 million. In FY18, $8 million had been allocated to energy efficiency related projects and programs.

Maryland is also a participant in the Transportation and Climate Initiative’s effort to develop a cap-and-invest program for transportation emissions. This team is engaged in modeling, outreach, and program development efforts and is targeting December 2019 for announcement of potential program design.

Last Reviewed: July 2019

Massachusetts is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

As of the end of 2017, 84% of Massachusetts’ $452 million of RGGI investment was dedicated to energy efficiency through the statewide Three-Year Energy Efficiency Investment Plans and other state programs managed by the Department of Energy Resources such as the Green Communities Designation and Grant Program. After administrative costs and mandated funding to communities that experienced fossil fuel plant closures are allocated, 80% of remaining proceeds (net funding) are allocated to the statewide Energy Efficiency Investment Plans implemented through the Commonwealth’s investor-owned utilities and Program Administrators under the Mass Save® brand to deliver cost-effective energy savings to Massachusetts residences and businesses. The remaining 20% of net funding has been used for Massachusetts’ Green Communities to implement clean energy projects including energy efficiency improvements in municipal-owned buildings, and more recently Massachusetts has initiated incentive programs for electric and plug-in hybrid vehicles through RGGI proceeds.

Massachusetts is also a participant in the Transportation and Climate Initiative’s effort to develop a cap-and-invest program for transportation emissions. This team is engaged in modeling, outreach, and program development efforts and is targeting December 2019 for announcement of potential program design.

Last Reviewed: July 2019

The State of Michigan does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Minnesota does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Mississippi does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Missouri does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Montana does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Nebraska does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Nevada does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

New Hampshire is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Last Reviewed: July 2019

New Jersey is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

New Jersey is also a participant in the Transportation and Climate Initiative’s effort to develop a cap-and-invest program for transportation emissions. This team is engaged in modeling, outreach, and program development efforts and is targeting December 2019 for announcement of potential program design.

Last Reviewed: August 2019

The State of New Mexico does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

New York is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Last Reviewed: July 2019

The State of North Carolina does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of North Dakota does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Ohio does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Oklahoma does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Oregon does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Pennsylvania does not yet have carbon pricing policies in place.

Last Reviewed: August 2019

Rhode Island is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Rhode Island is also a participant in the Transportation and Climate Initiative’s effort to develop a cap-and-invest program for transportation emissions. This team is engaged in modeling, outreach, and program development efforts and is targeting December 2019 for announcement of potential program design.

Last Reviewed: July 2019

The State of South Carolina does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of South Dakota does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Tennessee does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Texas does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Utah does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

Vermont is a member of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for reducing GHG emissions in North America that began its compliance period in 2009. Capping CO2 emissions from the power sector, the program aims to reduce emissions by 45% below 2005 levels by 2020 and additionally by 30% by 2030.

Vermont is also a participant in the Transportation and Climate Initiative’s effort to develop a cap-and-invest program for transportation emissions. This team is engaged in modeling, outreach, and program development efforts and is targeting December 2019 for announcement of potential program design.

Last Reviewed: July 2019

The State of Virginia does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Washington does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of West Virginia does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Wisconsin does not yet have carbon pricing policies in place.

Last Reviewed: July 2019

The State of Wyoming does not yet have carbon pricing policies in place.

Last Reviewed: July 2019