This chapter discusses the role of diffusion relative to local and federal domestic factors. It also discusses the relation between international and domestic causal drivers in the establishment of Regional Greenhouse Gas Initiative (RGGI) and in the subsequent design process of the programme, as well as how these factors have influenced the later revision of the design properties. The initial idea of establishing an emission trading system (ETS) for greenhouse gas (GHGs) was driven predominantly by inaction at the federal level and experiences of cap-and-trade in the region and nationally in the United States (US) – a combination of domestic politics and local/regional path dependencies. The most important background factor for establishing this regional ETS seems to have been the lack of federal climate-policy action. Policy diffusion was not an important driver in shaping this design property – internal economic factors were more decisive. Revenue earmarking was designed to benefit the RGGI states and their consumers.