Everything you need to know about the RGGI carbon market

The Regional Greenhouse Gas Initiative (RGGI, pronounced “Reggie”) was the first mandatory emissions trading scheme in the United States to limit carbon dioxide from the power sector.

The wold’s largest carbon futures fund (KRBN) currently allocates some 5% of AUM to RGGI, a similar proportion to that invested in the UK ETS. Whilst small relative to the funds allocated to the EU ETS and the Californian carbon market, investors should still understand what goes into the fund and what the potential risk-return is.

So how does the RGGI carbon market operate and what does it mean for the outlook for carbon prices in the scheme?