On September 3 I published an article about Regional Greenhouse Gas Initiative (RGGI) costs that contradicted the energy affordability messaging of Governor Hochul. A week ago, I had an article published at Watts Up With That which summarized recent articles here and posed a simple question: would the Regional Greenhouse Gas Initiative’s Auction 73 clearing price exceed the Auction 72 record of $35.00 per ton? The answer arrived this week, and it wasn’t close. RGGI announced that Auction 73 cleared at $37.65 per ton — $2.65 above Auction 72, and yet another record for the program.
I have been involved in the RGGI program process since its inception and have been writing about problems with the RGGI program here. I have worked on every cap-and-trade program affecting electric generating facilities in New York including RGGI, the Acid Rain Program, and several Nitrogen Oxide programs, since the inception of those programs. The opinions expressed in this post do not reflect the position of any of my previous employers or any other organization I have been associated with. These comments are mine alone. I acknowledge the use of Perplexity AI to generate material included in this document.
What RGGI reported
The RGGI press release described the results this way:
NEW YORK — The eleven participating states in the Regional Greenhouse Gas Initiative (RGGI), the nation’s first market-based regulatory effort to reduce greenhouse gas (GHG) pollution, today announced the results of their 73rd auction of carbon dioxide (CO2) allowances. 28,537,847 CO2 allowances were sold at the auction at a clearing price of $37.65. This includes an initial offering of 27,389,847 allowances and 1,148,000 CCR allowances. The allowance offering included a supply of 5,740,000 allowances from Virginia, which resumed RGGI participation on July 1, 2026. Bids for the CO2 allowances ranged from $2.69 to $190 per allowance.
Two details in that paragraph matter more than they might look at first glance. First, the auction included 1,148,000 Cost Containment Reserve (CCR) allowances, and Virginia’s re-entry contributed 5,740,000 allowances to the offering — the two factors I’d flagged in my earlier post as the only real candidates for near-term relief. Second, the top bid was $190 per allowance, five times the clearing price. That kind of bid spread is not what a market in balance looks like.
Why this result was predictable
Regular readers know I have been documenting this trajectory since summer. The short version: RGGI’s allowance price has more than tripled since the start of Governor Hochul’s tenure, and every structural signal pointed toward more of the same rather than relief in the latest auction.
In Hochul and RGGI Affordability, I quantified the wholesale-market effect of RGGI allowance costs and showed why it undercuts the Governor’s affordability messaging. New York’s electricity market pays every accepted generator the market-clearing price for a given interval. When an emitting generator sets that price, its RGGI allowance cost is embedded in the bid and gets paid to every dispatched resource in that interval — including non-emitting and imported resources that bear little or none of the underlying RGGI cost. That post showed the RGGI allowance price rising from $9.30 per ton at the first full auction of Hochul’s tenure to $35.00 at Auction 72 — a 276% increase. At the Auction 73 price of $37.65, that increase is now 296%. For a typical residential customer, the RGGI-attributable share of the electric bill was around 4.2% in 2024; at $37.65 it is roughly 7.8%.
I also covered the special report RGGI’s own market monitor, Potomac Economics, released on August 21, 2026 — the Report on the Supply and Demand for RGGI CO2 Allowances: Second Quarter 2026 — in RGGI’s Market Monitor Confirms the Scarcity I’ve Been Tracking. I believe that report’s timing, roughly eleven weeks after the record $35 auction, was meant to calm the market. Instead it confirmed that 2026’s CCR allowances were fully exhausted, that compliance entities and investors are increasingly hoarding rather than selling allowances as the compliance deadline approaches, that Virginia’s return adds less new supply than the demand it brings, and — most tellingly — that the report declined to address whether the steep post-2027 cap trajectory is sustainable, calling that question “beyond the scope” of the report. Given that the auction price went up anyway, whatever calming effect was intended did not materialize.
Heading into Auction 73, secondary-market pricing was already telling the same story. Argus Media reported 2026-vintage RGGI allowances trading in the high-$30s to around $40 per short ton in mid-to-late August (Argus Carbon), with December 2026 futures trading even higher. The market monitor’s own Q2 2026 report showed that investors — who have no obligation to sell — held 68% of the allowance surplus, with little incentive to release allowances below the price the market had already demonstrated it would pay. The 2026 CCR was gone before the auction. Virginia’s re-entry was always a net new claim on the bank, not a source of relief. A larger Auction 73 offering had the opportunity to absorb that pressure; instead, it simply confirmed how much latent demand exists, since the price cleared above $35 despite the bigger offering.
Put together, this is a consistent story, not a series of isolated data points. RGGI’s own cost-containment mechanism — the CCR, which is supposed to release additional allowances once prices cross a trigger — was exhausted as soon as 2026’s allowances became available, months before the compliance deadline. The regional cap is scheduled to tighten by more than 10% of the 2025 budget every year from 2027 through 2033, a pace the program has never sustained historically. Virginia’s re-entry adds demand faster than it adds supply. And New York adopted its conforming rule amendments in August without grappling with any of this, leaning on cost-impact modeling that predates the price spike and a ratepayer-benefit claim that ignores the wholesale market cost adder entirely.
None of this is abstract for consumers. My estimates put the total New York consumer impact of RGGI — direct allowance costs plus the wholesale market cost adder — at $1.1 to $3.4 billion annually at a sustained $37.65 allowance price, more than double the direct-allowance-cost figure that state messaging emphasizes. Scaled across all eleven RGGI states, the same mechanism plausibly adds several billion dollars more. That is the real price of a program whose defenders describe rising auction revenue as a “big opportunity” for new spending rather than what it actually is: a cost signal ratepayers are already absorbing.
When I posed the question of whether the price would exceed $35, I noted that every available signal pointed toward continued upward pressure rather than relief. Auction 73 confirmed it. That is real-time evidence that the price trajectory regulators have not acknowledged is not leveling off — and one more sign that the states’ own cost-containment tools, the mechanism regulators cite as evidence that consumer costs will stay manageable, can no longer do the job they were designed to do. Given these cost impacts, it is past time to pause RGGI.
Pragmatic Environmentalist of New York 