RGGI 61st Auction, 2023 in Review and the Consequence for Climate and Clean Energy Transition

BOSTON, MA- On Wednesday, September 6^th, the eleven states participating in the Regional Greenhouse Gas Initiative (RGGI) released the results of the 61^st auction for 2023. Emissions allowances were sold for $13.85 each, generating $303 million for clean energy investments in participating states. The allowance price for the RGGI program is the highest in 2023 and remains above the historical average. The Cost Containment Reserve (“CCR”) Trigger Price of $14.88 per ton of CO₂ was avoided, so no CCR allowances were sold in the auction. Both the proceeds from sales of allowances and the clearing price for this 61^st auction ranked among the top five highest in the history of RGGI.

Higher RGGI allowance price is good for climate, clean energy investment

The clearing price represents the price that power plant operators must pay for each ton of CO₂ emitted by their fossil-fuel-fired plants. The auction clearing price of $13.85 represents a 9% increase from the previous auction in June, and, in total, the average 2023 auction price is 3% lower than the average 2022 auction price. Having higher allowance prices seen in 2022 and 2023 means that the RGGI program is sending a stronger incentive to produce electricity from carbon-free sources, like wind and solar. Recent auctions have demonstrated the growing significance of the CCR – the auctions in 2022 and 2023 have all narrowly avoided the CCR trigger price, while the 54^th auction in December 2021 represented the first time since 2015 that additional allowances were released because of triggering the CCR.

Since the program launched, the vast majority of RGGI proceeds have been invested in energy efficiency and clean energy projects, as detailed in the most recent report on RGGI investments in 2021, released in June of this year. The $303 million in proceeds generated in this auction brings the annual to-date total to $6.1 billion, already 71.5% of the previous year’s record-setting total proceeds, with one more remaining auction in 2023, showing that auction proceeds have been trending upward in recent years. For example, the auction proceeds in 2023 so far are 22% higher than the total proceeds generated in all 2019 and 2020 auctions combined. This is great news for climate action, the economy, and the growing energy efficiency and clean energy workforce.

RGGI Third Program Review Offers an Opportunity to Direct Proceeds Towards Clean Energy Investments that Directly Benefit Environmental Justice Communities

Since its establishment, RGGI’s priorities have centered around reducing pollution from fossil fuel power plants and achieving climate solutions for RGGI states. Every five years or so, RGGI undergoes a program review, giving the participating states the opportunity to consider the program’s performance and make various changes, including the equitable disbursement of the program’s proceeds. RGGI’s Third Program Review is happening now. On Tuesday, September 26, 2023, as part of the Third Program Review, the RGGI states are holding a public meeting to discuss and seek feedback on different aspects of the program. After this meeting, RGGI Inc. will be soliciting written comments.

As discussed in more detail in Acadia Center’s most recent RGGI Report, the Third Program review offers an excellent opportunity to ensure that environmental justice communities are heard and are actively involved in the development of strategies to ensure a smooth, equitable transition to a carbon-free economy. This ongoing program review provides a chance for states to consider the recent auctions, the history of investments across the states, the need to address environmental justice communities directly, and other mechanisms associated with the cap-and-invest program.

Acadia Center remains closely involved in RGGI policy conversations across the RGGI states and will continue to advocate for program reforms that drive equitable investment and climate action.

Media Contacts:

Ben Butterworth, Director: Climate, Energy, and Equity Analysis
bbutterworth@acadiacenter.org, 617-742-0054 x111

Paola Moncada Tamayo, Policy Analyst
ptamayo@acadiacenter.org, 860-246-7121 x204