Emissions and Health Implications of Pennsylvania’s Entry into the Regional Greenhouse Gas Initiative

Abstract

The Regional Greenhouse Gas Initiative (RGGI) is a cap-and-trade system targeting CO2 emissions from the electricity sector in the northeastern United States. As a major power producer and carbon emitter, Pennsylvania plans to join RGGI in 2022, which will affect both the carbon market (i.e., RGGI) and the regional electricity market (i.e., PJM). Combining a PJM power system model with a reduced-form model of CO2 emissions abatement from RGGI states that are not in PJM, we find the annual average emissions from power plants in Pennsylvania can be reduced by 40%, 79%, 68%, and 76% for CO2, SO2, NOx, and PM2.5, respectively, during 2022-2030. Then, based on a range of source-specific marginal damage estimates, we find the cumulative monetized health cobenefits to be 17.7 to 40.8 billion USD. However, the reduced emissions and health damages in Pennsylvania are slightly offset by increases in the other states in PJM that do not participate in RGGI. Our study hence highlights the potential cross-state leakage issue that warrants careful consideration in the policy design and implementation process.