Roger Caiazza
On June 26, 2026, the Regional Greenhouse Gas Initiative (RGGI) organization released its annual Investments of Proceeds report. Cap-and-invest programs like RGGI are frequently touted as a program that will kill two birds with one stone. “It simultaneously puts a limit on the tons of pollution companies can emit — ‘cap’ — while making them pay for each ton, funding projects to help move the jurisdiction away from polluting energy sources — ‘invest.’” Advocates praise RGGI as a successful model for cap-and-invest programs citing observed emission reductions and the quantity of funds raised. Recent events and the investments report suggest that RGGI advocates are mistaken.
RGGI is a market-based program to reduce greenhouse gas emissions (GHG) (Factsheet). It has been a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the power sector since 2008. New Jersey was in at the beginning, dropped out for years, and re-joined in 2020. Virginia joined in 2021, withdrew in 2024, and rejoined effective July 1, 2026, and Pennsylvania considered joining but has since decided not to join.
Proceeds Investment Report
The 2024 investment proceeds report was released on June 26, 2026. According to the press release: “In 2024, $856 million in RGGI proceeds were invested in programs including energy efficiency, clean and renewable energy, beneficial electrification, greenhouse gas abatement, and direct bill assistance.”
Figure 1: RGGI Investments by Category
Source: RGGI 2024 investment proceeds report
The press release goes on: “Over their lifetime, these 2024 investments are projected to provide participating households and businesses with $2.6 billion in energy bill savings and avoid the emission of 4.4 million short tons of CO2.” The report breaks down the investments into major categories:
Energy efficiency makes up 46% of 2024 RGGI investments and 54% of cumulative investments. Programs funded by these investments in 2024 are expected to return about $1.8 billion in lifetime energy bill savings to more than 127,000 participating households and 2,000 businesses in the region and avoid the release of 2.1 million short tons of CO2.
Clean and renewable energy makes up 6% of 2024 RGGI investments and 11% of cumulative investments. RGGI investments in these technologies in 2024 are expected to return over $421 million in lifetime energy bill savings and avoid the release of more than 1.1 million short tons of CO2.
Beneficial electrification makes up 16% of 2024 RGGI investments 6% of cumulative investments. RGGI investments in beneficial electrification in 2024 are expected to avoid the release of 1.2 million short tons of CO2 and return over $167 million in lifetime savings.
Greenhouse gas abatement and climate change adaptation makes up 4% of 2024 RGGI investments and 6% of cumulative investments. RGGI investments in greenhouse gas (GHG) abatement and climate change adaptation (CCA) in 2024 are expected to avoid the release of more than 3,400 short tons of CO2.
Direct bill assistance makes up 23% of 2024 RGGI investments and 16% of cumulative investments. Direct bill assistance programs funded through RGGI in 2024 have returned over $197 million in credits or assistance to consumers.
Unfortunately, this official story about the virtues of RGGI investments does not square with reality.
Emission Reductions
All my analyses of the RGGI Investment Proceeds reports have found the same results. Since the beginning of the RGGI program, RGGI funded control programs have been responsible for a small fraction of the observed reductions – only 8.7% in 2024 (Table 1). Figure 2 plots CO₂ emissions by fuel type across all eleven RGGI states from 2006 to 2025. What you see is fuel switching caused the reductions and that there are only minor opportunities for future fuel switching. Consequently, future reductions will have to rely on the deployment of zero-emission generating resources and load reductions which makes cost-effective emission investments important.
Table 1: State-Level CO2 Emissions for Nine RGGI States 2009 to 2025
Figure 2: Eleven State RGGI CO₂ Emissions (short tons) for all Programs 2006–2025
The importance of cost-effective investments for emission reductions is unacknowledged by the RGGI states. I calculate cost effectiveness by dividing the RGGI total investments divided by the estimated avoided CO2 emissions. In 2022 the CO2 emission reduction efficiency was $949 per ton of CO2 reduced, in 2023 the cost per ton reduced increased to $1,854, and in 2024 the cost per ton reduced reached $3200 per ton. It is not clear why there are such big changes. There is no obvious change in investment strategies, but the avoided annual CO2 emissions went down 42% in 2024 from 2023. I suspect that the calculation methodology contributes to these numbers, but this cannot be confirmed because there is insufficient documentation.
Table 2: Accumulated Annual RGGI Proceeds, Avoided CO2, and Cost Efficiency
Emission Reduction Costs
RGGI is supposed to be an emissions reduction program. On July 3, 2025, RGGI announced the results of the Third Program Review that modified the requirements for future reductions. Based on my analysis of the planned revisions, the RGGI States only delayed the inevitable reckoning of the futility of this program to achieve the goal of a “zero-emissions” electric system. The RGGI summary of the revisions states that the revised mandated reductions will “decline by an average of 8,538,789 tons per year, which is approximately 10.5% of the 2025 budget” from 2027 to 2033.
The emission proceeds reports can be used to estimate expected costs if RGGI investments were the only source of emission reductions. Table 3 lists the cost per ton of CO2 removed of the RGGI investments from 2015 to 2024, the cost to reduce 8,538,789 tons per year using their observed costs, and the RGGI proceeds for each year. In 2024, the Third Program Review mandated annual emission reduction multiplied by the cost per ton ($1,854) totaled $27.3 billion but the RGGI proceeds were only $0.86 billion. Even using the cost over the entire 10-year period of $1,126 per ton, it would cost $9.6 billion each year to make the reductions mandated. This is far short of the proceeds available.
Table 3: Annual RGGI Cost Efficiency, Cost to Meet 2027 RGGI Annual Reduction, and Annual Proceeds
The 2024 investment proceeds report breaks down the investments into major categories. I added the annual values for each category to provide the following summary (Table 4). Note that the overall cost effectiveness is $1,422 per ton avoided. Clearly the proceed investment strategy is not emphasizing emission reduction effectiveness. It is encouraging that savings of $1.3 billion are claimed but total investments are $3.1 billion. In my opinion, these numbers are inconsistent with claims that RGGI is successful.
Table 4: RGGI Proceeds Report Investment Category Annual Totals
Cost Effectiveness Implications
One of my big concerns about any cost on carbon emissions is that it is a regressive stealth tax on energy and impacts those who can least afford it the most. There is a tradeoff between trying to minimize those impacts and reducing emissions. In the last seven years $568 million or 18% of the RGGI auction proceeds went to direct bill assistance, which is good but that means that much less was available to reduce emissions (Table 5). Throw in the $166 million over the last seven years for administration that means that 24% of the RGGI auction proceeds were not used to reduce emissions.
Table 5: Summary of Recent RGGI Categorial Investments and Avoided Emissions Over the Last 7 Years
Discussion
I have been involved with RGGI since the beginning, and I have always been primarily concerned about compliance with the rules. Figure 2 shows there are limited opportunities to make further fuel switching changes. Affected sources only have one other control option: running less. Consequently, future reductions will have to rely on RGGI-funded programs that increase the deployment of zero-emission generating resources and programs that reduce load. If RGGI does not change its investment priorities to recognize the need to reduce emissions, there will come a time when the only compliance option available to affected generating plants is to reduce operations. That will create an artificial energy shortage.
Even if RGGI investment priorities are changed, there is the fact that the observed costs to reduce emissions are high. Historical results show RGGI investment proceeds can only fund a fraction of the 8,538,789 tons per year reduction mandated by their Third Program Review in 2027. The only way to fund the necessary reductions is to increase the proceeds by charging more for the allowances.
I recently noted that the closing Quarter 2, 2026 auction was price held on June 3, 2026, was $35.00 up 40% from the March 11, 2026, auction price of $24.99 (Figure 3). Assuming that in 2027 there will be 150 million allowances available from the original allocation, both cost containment reserve allocations, and the addition of Virginia, the proceeds at $35 per ton will be $5.3 billion but at the average cost efficiency rate $9.6 billion is needed to achieve the 8,538,789 tons per year reduction mandate. That means that the allowance price needs to reach $64 per ton to fund the mandate. I think that value is politically unpalatable.
Figure 3: RGGI Quarterly Auction Clearing Price
Conclusion
These results support my conclusion that RGGI can only claim to raise money effectively. Claims that RGGI is a successful emission reduction program are inconsistent with the following observations. The amount raised falls far short of the funds necessary to reduce RGGI emissions in accordance with Third Program Review requirements. Investment priorities are inconsistent with the emission reduction objectives. Finally, emission reductions associated with RGGI investments only account for 8.7% of the observed reductions.
These results have important implications because I believe that they represent systemic issues with the cap-and-dividend emission reduction approach. Unfortunately, I don’t think that RGGI will fail before others, including New York State, try to implement similar schemes based on the “successful” RGGI model.
Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York. Dealing with the RGGI regulatory and political landscapes is challenging enough that affected entities seldom see value in speaking out about fundamental issues associated with the program. He has been involved in the RGGI program process since its inception and has no such restrictions when writing about the details of the RGGI program. This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.
