Last week ten states, joining together as the Regional Greenhouse Gas Initiative (RGGI) hosted the first U.S. carbon-credit auction. Participating states netted a total of $39 million for investment in renewable energy. Plans are in place for the cap-and-trade auction to be held quarterly.

Maryland walked away with $16 million and Massachusetts $13 million. Other states that took part in the auction include Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

The regional auction of allowances will enable the participating states to reduce emissions from carbon sources and have funds on hand to invest in renewable energy instead.  The states sell emission allowances at auction and invest the proceeds in consumer benefits -- energy efficiency, renewable energy, and other clean energy technologies -- spurring innovation in the clean energy economy and thereby creating green jobs.

Each credit sold for a mere $3 a ton at this first auction. Most experts believe that $40 -$100 a ton is needed in order for us to make the switch to a post-carbon economy. 

The states participating in RGGI had already agreed on an initial regional cap on carbon emissions -- 188 million tons per year -- that will be enforced through 2014. Starting in 2015, the cap will be reduced 2.5 percent each year.

The 233 power plants in the ten states are required to pay for each ton of carbon dioxide they emit, as part of the pollution-reduction legislation already passed among the 10 states that limits the amount of carbon dioxide power plants are allowed to emit.

Alternatively, the power plant can find a way to reduce its pollution. One such option would be utilizing combined cycle heat and power technology, creating twice the energy on a per-ton of carbon basis. CS technology is among the efficiency measures funded under the renewable energy incentives in the federal legislation finally signed into law last week attached to the bailout.

State-based legislative innovation like the Regional Greenhouse Gas Initiative has historically led the nation in jumpstarting the green industrial revolution.

California is one example of where this has already happened. Zero-emissions vehicles requirements in CARB legislation in the '90s created a talent pool of engineers that sparked an entire new startup electric car industry in California (with names such as Tesla, Phoenix, ZAP, Miles and AC Propulsion) and provided the initial boost that propelled Ford, Toyota and GM into the electric car industry, by requiring auto companies make at least some zero emissions vehicles, in order to sell in the state.

Large car companies fought that legislation, ultimately succeeding in defeating it.  Yet in different ways the legislation led to the production of zero-emissions vehicles from Big Auto that could revitalize the U.S. auto industry here.

Ford's THINK, developed in response to CARB legislation, is about to return to these shores, albeit now under Norwegian ownership. Rising from the ashes of the EV1, GM is now dedicated to getting the Volt to market in time to save itself. Toyota got a tremendous amount of help from its own government with consumer subsidies to meet the CARB deadline that produced the Prius.  Toyota has become something of a de facto U.S. automaker with Prius-dedicated plants popping up in the states. 

Regional clean energy legislation can thus have very far-reaching effects.

So it will be interesting to see how the RGGI states invest in renewable energy. Boston's MIT, home to a wealth of innovative ideas in need of startup funding, will no doubt have an influence on the direction that Massachusetts decides to take. Maryland's ideas include helping low-income families weatherize their houses and providing upfront funding for home solar panels.

"This is the moment we've been waiting for," said Brad Heavner of Environment Maryland, who pushed lawmakers to join RGGI. "Everyone wants more clean energy, and there's a widespread acceptance that it's a good thing to do to put public resources into it. But we've never been able to come up with the money."