RGGI Reduces Carbon Cap to Account for Banked Allowances

The member states of the Regional Greenhouse Gas Initiative, or RGGI, on March 15 announced the third adjustment for banked allowances held by market participants for the five-year period from 2021-2025. The adjustment is a reduction in the number of carbon allowances that is being sold over the period. The amount of the reduction is equal to the private bank of allowances at the end of 2020. The adjustment is about 95.5 million allowances at 19.1 million for each year of the five-year period.

RGGI, the nation’s first market-based program to cut power sector emissions, now has 11 member states following Virginia’s entry in January and New Jersey’s reentry in 2020. Virginia’s inclusion increased the regional emissions cap coverage by almost 30 percent.

Two interim control period adjustments for banked allowances that followed the 2012 Program Review, resulted in the adjusted carbon cap falling to about 62.5 million in 2017 from 82.8 million in 2014. The cap was planned to eventually drop to 56.3 million in 2020, but with the reentry of New Jersey as a member state in 2020, the adjusted cap for 2020 was increased to 74.3 million tons.

RGGI’s 51st carbon auction, held on March 3, sold nearly 23.5 million permits, clearing at an all-time high price of $7.60 per allowance, and generated nearly $180 million. The member states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia.