RGGI Generates Nearly $180 Million in First Carbon Auction After Virginia’s Entry

The 51st quarterly carbon auction of the Regional Greenhouse Gas Initiative, or RGGI, the nation’s first market-based program to cut power sector emissions, sold all of the nearly 23.5 million permits offered for sale at a price of $7.60 per allowance, according to the auction results released on March 5. This is the first auction for Virginia since it officially joined the program in January. RGGI now has 11 member states, and Virginia’s inclusion increases the regional emissions cap coverage by almost 30 percent.

The clearing price is the highest since the December 2015 auction, which cleared at $7.50. The auction generated about $178.4 million, bringing the total proceeds to nearly $4 billion. Compliance entities accounted for 73 percent of allowances sold in all the auctions so far.

Virginia’s entry follows the enactment of the 2020 Clean Economy Act, which put the state on the path to carbon-free power, and companion legislation that established a cap-and-trade program to reduce emissions from power plants. With Virginia’s inclusion, the eleven participating states will comprise about 20 percent of the U.S. economy.

New Jersey rejoined RGGI in January 2020 and started taking part in the quarterly auctions after a break of about eight years. The state’s Democratic Governor Phil Murphy signed an executive order in January 2018, initiating the process of re-entry, after his predecessor, Chris Christie, a Republican, withdrew the state in 2012.

Meanwhile, Pennsylvania’s Environmental Quality Board adopted draft regulations last year for an emission trading program covering the power sector from 2022 through 2030, with the ability to link with RGGI. Pennsylvania’s entry into RGGI is significant in that it would bring a major fossil fuel producing-state into the compact.

The regional carbon market has received a boost with new members, with the expansion signaling the growing preference of states for collaborative efforts to devise climate solutions. RGGI’s market-based approach sets an annually declining limit on carbon emissions from power plants and allows polluters to buy or sell permits.