The Environmental Protection Agency’s proposed Clean Power Plan is drawing a lot of attention to the carbon cap-and-trade program run by nine Northeast and mid-Atlantic states, including Massachusetts.

The Clean Power Plan, if it survives legal challenges, will require each state to reduce its power plant carbon-dioxide emissions to a target level set by the EPA. The goal for the country as a whole is a 30 percent reduction by 2030 compared to 2005 levels. Power plants are the focus of the plan because they account for the largest share of the nation’s carbon dioxide emissions — 31 percent as of 2013, according to the EPA.

Ken Kimmell, president of the Union of Concerned Scientists and an environmental official in the administration of former governor Deval Patrick, says he expects many states to either join the Northeast’s cap-and-trade program, called the Regional Greenhouse Gas Initiative (RGGI), or set up their own because such initiatives make it easier to comply with the EPA plan.

“RGGI is an excellent fit for compliance with the Clean Power Plan,” Kimmell says. “Cap and trade is also starting to spring back to life, not just in the US but across the world.”

Kimmell says the RGGI is attractive because it targets the same power plant emissions that are the focus of the EPA plan and because the program is regional, transparent, and enforceable. He said a regional approach is more cost-effective from a regulatory standpoint because electricity tends to cross state lines. He said the hard cap on carbon emissions makes it easy to demonstrate compliance. And he said a cap-and-trade program offers states some flexibility on what they do to meet the EPA’s goal while putting the onus of compliance on power generators, which are already tightly regulated.

The whole push to rein in carbon dioxide emissions by the EPA is rekindling interest in cap and trade, a mechanism that most observers had written off after the US Senate defeated a nationwide emissions trading plan in 2009. The Canadian province of Ontario announced in April it intended to join a cap-and-trade system on greenhouse gas emissions with Quebec and California. China is also testing a cap-and-trade program in seven different cities. Both of those initiatives extend beyond emissions from power plants.

Coal states and coal producers in the United States are trying to block the EPA rules from taking effect, with many of them predicting the goals for carbon dioxide reduction at power plants will drive up electricity costs dramatically. But that hasn’t happened yet with the Regional Greenhouse Gas Initiative, perhaps because the region has never been as dependent on coal-fired power as other parts of the country.

Here’s how RGGI works: Power plants in the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont are required to purchase allowances for every ton of carbon dioxide they emit. Allowances are sold at auction every three months. The total number of allowances put up for sale each year is capped and the cap is reduced annually by 2.5 percent. Money raised from the sale of allowances is funneled back to the states, which tend to use the funds for energy efficiency or renewable energy programs.

The goal of the program is two-fold: Put a price on carbon dioxide emitted from power plants, spurring plant owners to invest in cleaner technologies, and use the proceeds from the sale of allowances to fund measures that reduce energy demand.

RGGI says carbon dioxide power plant emissions in the nine-state region have already been cut 40 percent from 2005 levels and are projected to decline 50 percent by 2020. Those numbers don’t mean RGGI is already in compliance with the EPA’s plan because RGGI and the EPA calculate carbon reductions differently. RGGI measures overall power plant carbon dioxide emissions, while the EPA measures carbon emissions per unit of energy generated.

The regional cap-and-trade program is regarded as a success because it has demonstrated that a price can be established for carbon without crippling the economy or driving electricity prices sky-high. Since 2008, when RGGI was launched, electricity prices across the nine states have fallen an average of 8 percent and the state economies have grown faster than the nation as a whole, according to the Acadia Center, a clean energy advocacy group. A total of 28 carbon allowance auctions have been held since September 2008, generating more than $2 billion in revenue for the participating states. Massachusetts’s share of the total is $345 million.

But the cap-and-trade program hasn’t worked exactly the way it was drawn up on paper. It works — auctions are held, allowances are sold, and the proceeds are invested — but the cap-and-trade program has not been the driving force behind efforts to address climate change. It’s been just one tool in the tool box, and a very quiet one at that. “This is the biggest success you’ve never heard of,” says Peter Shattuck, Massachusetts director of the Acadia Center.

In 2008, when the program was launched, the cap was set at 165 million tons. But the launch of the program coincided with the shale gas boom, which drove down the price of natural gas and prompted power plants to drop oil and coal as their fuels and shift to gas. Demand for electricity also ebbed because of state energy efficiency efforts, the development of renewable energy, and a downturn in the economy.
During RGGI’s first five years, the region’s power plants were emitting about 91 million tons of carbon dioxide a year, about 55 percent of the cap. At the carbon allowance auctions, demand never exceeded supply, so prices stayed below $2 per ton until 2013, when the states began laying plans to tighten up the market.

In February 2013, the states agreed to set a new cap of 91 million tons starting in 2014 and pledged to reduce the cap by 2.5 percent a year. Programs were also put in place to begin retiring allowances purchased in previous years when they were plentiful. The auction price of carbon dioxide allowances responded, rising initially to $4, then $5, and to $5.50 at the most recent auction on June 3. At the more recent auctions, every allowance has sold out.

“That’s simply supply and demand. The trend right now is within the range we projected in our model,” says David Littell, a commissioner of the Department of Public Utilities in Maine who sits on the RGGI board. He said the impact on electricity bills remains small, an estimated .5 to 1 percent of the typical bill.

Littell says auction prices shouldn’t spike, because of safeguards that put more allowances up for sale if auction prices rise too quickly. He predicts allowance prices should remain below $10 a ton in 2020.

Market pressures are also likely to keep allowance prices in check. Even with the cap reduction in 2014, the actual emissions in 2013 were nearly 5 percent lower than 2014’s 91 million-ton cap. That trend may continue as the shift toward cleaner energy continues. The coal-fired Brayton Point power plant in Somerset, one of the largest carbon dioxide emitters in the nine-state region at 2.7 million tons a year, is expected to shut down in 2017.