We have heard that the RGGI market is oversupplied with CO2 permits this year. Does this mean that a voluntary purchase won actually reduce carbon emissions?
No it does not. Even if the RGGI market is oversupplied with CO2 permits your voluntary purchase will still reduce carbon emissions. The reason is a crucial rule within RGGI that allows for the “banking” of permits. It means that if there are leftover permits one year, power plants can save or “bank” these permits and use them in a later year. If permits are banked, power plants are able to use old permits to emit an extra ton of CO2 in a later year. If a voluntary purchaser had removed these permits from the market, power plants would be forced to reduce emissions. The “banking” rule adds price stability to the market, and ensures your purchase forces a reduction in carbon dioxide emissions. The flowchart below walks through this question.
