Carbon – In focus: RGGI soars to historic highs

Houston, 1 May (Argus) — The Regional Greenhouse Gas Initiative (RGGI) CO2 allowance trading market catapulted to historic levels in recent days ahead of Virginia’s earlier-than-expected return to the program in July, leaving market participants confounded over the cause behind the record rise in prices.

The northeast US power plant cap-and-trade program has set a series of record highs since 20 April, with prompt-month and December 2026 allowances soaring as much as 44pc week on week to $47/short ton (st) and $47.09/st, respectively, on Thursday.

Virginia’s emissions are on track to reach 7.5mn st for the first quarter of this year, according to preliminary US Environmental Protection Agency data. The state’s adjusted RGGI emissions cap for the latter half of this year is set at just under 11.5mn st.

“Virginia has absolutely been a factor and probably will be dominant in the near term,” said Paola Tamayo, a senior policy and data analyst at the Acadia Center, a non-profit clean energy research group.

Northeast US states have had to balance affordability with their climate goals, which are some of the most stringent in the nation and are increasingly being framed as an obstacle towards lowering costs.

Still, RGGI is a vehicle for member states to raise revenue for clean energy and energy efficiency investments and, more importantly, ratepayer rebates to compensate for rising costs.

“I still think policymakers still view RGGI as a very high value revenue source for those programs in the sense that it’s an efficient way to raise revenue,” said to Jamie Dickerson, senior director of climate and clean energy programs at the Acadia Center.

But Virginia’s summertime return may only be part of the reason behind the dramatic rally.