Third Control Period (2015–2017)
Allowance prices steadily increased through 2015 to a high of $7.50 per ton as nuclear plant closures were announced and the Obama administration released its Clean Power Plan. The 2015 Cost Containment Reserve fully sold out, demonstrating its effectiveness at slowing price increases. However, prices fell steadily through 2016 and early 2017 to a low of $2.53 per ton as it became clear that the Clean Power Plan would not be implemented. After the 2016 Program Review was completed and RGGI states announced a cap reduction goal of 30 percent by 2020, prices increased again. All allowances offered in the first auction of the third compliance period were sold.
Changes implemented after the 2016 Program Review
On Aug. 23, 2017, RGGI states announced proposed changes to the program as part of the 2016 Program Review. They announced an overall cap reduction of 30 percent between 2020 and 2030. The CCR mechanism remains in place, but with higher trigger prices ($13 in 2021, increasing 7 percent annually). A new mechanism called the Emissions Containment Reserve (ECR) will be implemented beginning in 2021. Under the ECR, states can choose to withhold up to 10 percent of their annual budget, if prices fall below certain triggers ($6 in 2021, increasing 7 percent annually). In this way, states can choose to force more reductions if prices are lower than currently projected. Seven states (Connecticut, Delaware, Maryland, Massachusetts, New York, Rhode Island, and Vermont) intend to implement the ECR.
These changes will be finalized after each state undergoes its own regulatory process to approve them.
Fourth Control Period (2018–2020)
Thus far, there have been six auctions. Allowance prices have dropped from the previous control period to an average price of $4.76. This will be the final control period before the overall cap is reduced between 2020 and 2030. Nearly all RGGI states (except for New Hampshire) have formally committed to advance the goals of the Paris Agreement, to reduce their emissions 26 to 28 percent below 2005 levels by 2025.
New RGGI States
Since 2018, Virginia has attempted to join RGGI through various pathways. In April 2019, Virginia attempted to join RGGI by adopting a cap-and-trade program similar to RGGI. However, in May 2019, Virginia’s governor signed a budget which included a rider barring the commonwealth from participating in RGGI for the 2019 – 2020 fiscal year. The commonwealth remains interested in seeking market-based mechanisms for reducing carbon emissions.
In June 2019, New Jersey finalized two rules to rejoin RGGI after withdrawing from the compact in 2012. The first rule, the Carbon Dioxide Budget Trading rule, sets the state’s electricity generation overall cap at 18 million short tons for 2020. Its CO2 budget will decline by 30 percent through 2030. The second rule, the Global Warming Solutions Fund rule, establishes how the revenue from the RGGI allowance auctions will be spent, a majority of which be allocated towards environmental justice communities.