Roger Caiazza
Regular readers know I’ve spent this year documenting how New York regulators sell the Regional Greenhouse Gas Initiative (RGGI) to the public as a successful cap-and-invest program that can serve as a model for other jurisdictions. However, that story is getting harder to sell. Costs are rising and lawmakers are catching on to the fact that this be addressed. For example, in New Jersey legislation has been proposed to suspend participation in RGGI and establish a fixed fee instead.
This is a real problem. RGGI auction prices jumped 40% from the first to the second auction this year. The third auction this year cleared at $37.65 per allowance in the previous auction. This is an increase of 296% from the $9.30 clearing price at the September 2021 auction five years ago (Figure 1).
Figure 1: RGGI Quarterly Auction Clearing Prices
In an effort to allay RGGI concerns the Acadia Center — a New England clean-energy advocacy group — published a fact sheet titled “Regional Greenhouse Gas Initiative (RGGI) Impacts in ISO New England: Setting the Record Straight on Costs and Benefits” two days before that auction cleared, on September 9, 2026, The report claims that RGGI is a 4-to-1 winner for ratepayers. In 2025, the six ISO-New England states generated $445 million in RGGI auction proceeds, which Acadia projects will return $1.3 billion in lifetime energy-bill savings — comfortably beating the $815 million ISO-NE estimates RGGI added to 2025 wholesale electricity costs. It closes by urging ISO-NE states to keep championing the program.
Modeled savings vs. one year of cost
Acadia’s $1.3 billion savings figure is a projection, not a measured result — its own Endnote 3 says so. Because “2025 investment and outcomes data are not yet available,” the analysis takes 2024’s ratio of proceeds invested to lifetime savings returned, per program category, and applies that ratio to 2025’s actual proceeds. That is a projection built on an assumption of continuity, not a report of what happened.
It’s the same structural move DEC and NYSERDA made defending New York’s amendments: $12.334 billion in “Energy Bill Savings to Participating Customers” against $2.188 billion invested. I went through the Technical Support Document behind that number for an earlier post: it’s a modeled, expected-lifetime estimate that includes pipeline projects, hasn’t generally been adjusted through evaluation, measurement, and verification (EM&V), and is compared only against historical expenditures, not the program’s full cost to all ratepayers. Acadia’s multipliers — 4.5x for efficiency, 8.2x for clean energy, 1.22x for electrification, 1.0x for bill assistance — are the same species of ratio.
Acadia also compares apples to oranges on timing: the $1.3 billion compounds over the 15-to-20-year measure life of efficiency and clean-energy programs, while the $815 million cost is 2025 only. Discount that delayed, partially realized return to present value — and a 4-to-1 ratio, like NYSERDA’s 6-to-1, looks considerably less generous than advertised.
The wholesale-market cost adder Acadia leaves half-examined
Acadia’s entire cost side of the ledger is ISO-NE’s estimate that carbon pricing programs added $815 million to 2025 wholesale electricity costs, or roughly $55 per household per year. But ISO-NE’s 2025 Annual Markets Report shows that figure is already marked up from the direct allowance cost: it separately estimates the direct spot-price cost of allowances at about $668 million, versus roughly $1.1 billion added to total energy-market costs across all carbon programs — a 65% gap, because “the inclusion of carbon costs raises the market clearing price” paid to every dispatched resource, not just the unit that bought the allowance.
That’s the same mechanism I’ve documented in New York, where NYISO pays every accepted generator the marginal clearing price for a given interval, so an emitting generator’s RGGI cost gets embedded in the bid and paid out to every dispatched resource, including non-emitting and imported resources that bear little or none of the underlying cost. Accounting for that full wholesale effect roughly doubles New York’s annual consumer cost relative to counting direct allowance purchases alone; at the Auction 73 price of $37.65, my estimate for New York’s total consumer impact runs $1.1 to $3.4 billion annually — more than the $815 million Acadia cites for New England.
Averages hide who actually pays and who actually benefits
Acadia’s own Table 2 shows the 4-to-1 story doesn’t hold uniformly. Vermont receives $9.45 million in proceeds and shows zero recorded clean-energy or electrification savings — its entire $42.1 million total comes from efficiency alone. New Hampshire gets $65 million in direct bill assistance and comparatively little efficiency benefit relative to its proceeds. Massachusetts, with the most mature efficiency infrastructure, drives most of the region’s projected savings. Acadia’s multipliers aren’t universal constants; they depend on which program category a state’s dollars land in. The cost side doesn’t vary the same way — the wholesale cost adder is charged to every ratepayer uniformly, whether or not that household ever sees an efficiency rebate. Averaging across six states and four program categories smooths over exactly the distributional problem that determines whether any ratepayer actually comes out ahead.
How much of the 37% is actually RGGI?
Acadia states that RGGI “has driven CO2 reductions of 37% since 2001 across New England power plants.” RGGI didn’t hold its first auction until 2008, and New England states didn’t begin compliance until 2009 — the program cannot claim credit for reductions that occurred before it existed. For the years RGGI has actually operated, I’ve run the equivalent calculation for New York using the state’s own reported cumulative program benefits, and found RGGI-funded investments account for only about 4.7% to 8.7% of the observed power-sector CO2 reduction since the program began. The overwhelming majority of the historical reduction is fuel switching from coal and oil to lower-emitting natural gas — a transition that happened for reasons largely unrelated to RGGI’s reinvestment programs and offers little room to repeat.
Acadia’s own Table 3 makes the same point for New England, probably without meaning to: natural gas now accounts for 95.4% of RGGI-covered CO2 emissions in ISO-NE, with oil contributing just 3.7%. The coal-to-gas switch that produced most of the historical decline has already happened; there’s essentially no coal left to switch away from. That raises the question Acadia doesn’t ask: if further reductions now require displacing gas generation directly, rather than riding a fuel-switching wave that’s already run its course, what’s the actual mechanism — and cost — of the next round of reductions the program claims credit for?
“Manageable” is getting harder to say with a straight face
Acadia’s closing recommendation is that ISO-NE states keep championing RGGI and finish implementing the Third Program Review’s steeper caps. That doesn’t engage with what’s happening in the allowance market right now. RGGI’s own price-relief valve, the Cost Containment Reserve (CCR), was fully exhausted for 2026 in the first auction it was available, months before the compliance deadline. The Auction 73 clearing price already exceeds the 2036 CCR1 trigger price and the 2030 CCR2 trigger price, suggesting both CCR tranches will be exhausted at the first quarterly auction of future years — meaning the mechanism won’t meaningfully restrain cost when it’s needed most.
On August 21, 2026, RGGI’s independent market monitor, Potomac Economics, released an unprecedented special report on the second-quarter 2026 supply-demand balance, apparently to reassure the market after the Auction 72 price spike. Instead, it confirmed that investors and compliance entities are increasingly hoarding allowances rather than selling, that investors hold 68% of the allowance surplus with no obligation to sell, and that Virginia’s return adds less new supply than the demand it represents. Most tellingly, the report declined to address whether the post-2027 cap trajectory — more than 10% annual reductions from 2027 through 2033, a pace never sustained historically — is even sustainable, calling that question “beyond the scope.”
Auction 73 answered the question the market monitor wouldn’t. The cap tightens further, the CCR is gone for the year, Virginia is a net new claim on the allowance bank rather than a source of relief, and the price cleared at a record $37.65 anyway. If the tool designed to prevent this kind of price escalation is already exhausted, and the program’s own monitor won’t vouch for the tightening path immediately ahead, “keep championing the program and keep tightening the cap” is not the reassuring conclusion Acadia presents it as.
What would actually set the record straight
RGGI’s proponents keep insisting the program is a clear win for ratepayers with no real cost attached. The accounting behind that claim doesn’t support it — not in New York, and not in New England. A real accounting would publish realized, EM&V-verified savings instead of projected lifetime estimates; have ISO-NE and NYISO calculate the full wholesale-market cost adder from hourly dispatch data; and report the cost per ton of CO2 actually achieved through RGGI-specific investment, isolated from the fuel-switching reductions that have already largely run their course. Until that accounting exists, a multi-year 4-to-1 ratio measured against one year of narrowly scoped cost isn’t setting the record straight. It’s the same move New York regulators made with a bigger number, dressed up for a different region. Given the energy affordability crisis in the RGGI states it is long past time to set the record straight and hold politicians supporting the program accountable for the costs of the program.
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. He acknowledges the use of Perplexity AI to help research and draft this post.
