Virginia’s first sale of Regional Greenhouse Gas Initiative (RGGI) carbon allowances in 33 months will collect $259 million from electricity producers and allowance market speculators, almost one-third as much money as the prior twelve such auctions combined.
The new clearing price of $37.65 per ton of carbon emissions was announced by the RGGI organization Friday morning. That is 8 percent higher than the price set in June and 69 percent higher than the September 2025 clearing price of $22.25. This was the first RGGI quarterly auction to exceed $1 billion in revenue across all the participating states.
The quarterly auction was held on Wednesday, the first with Virginia as a participant since December 2023. As of July, large electric power generators in the state must buy and then retire an allowance from RGGI for every ton of emissions from their generators.
Dominion Energy Virginia is the largest consumer of RGGI allowances. When the state was last part of the 11-state compact, the utility added the cost of allowances directly onto its customers’ monthly bills with a rate adjustment clause. It already has a petition at the Virginia State Corporation Commission (SCC) to start doing that again early next year, at $13 per 1,000 kilowatt hours. That was not based on these higher prices.
In the wake of the June auction’s result of $35 per ton and Dominion’s application to the SCC, the Virginia General Assembly voted to create a refund mechanism on RGGI allowance costs passed along to utility consumers. It will only be available to residential customers and the smallest business customers. Only about 45% of the state’s RGGI proceeds (opponents consider it a carbon tax) will go to rebates.
More than half of the $259 million Virginia will collect on this auction will be used to provide energy conservation projects for low-income homeowners or pay for flood mitigation projects. If the September price holds in the December 2026 auction, Virginia will collect another $216 million from the generators.
Not every generation company having to buy RGGI allowances has a mechanism like Dominion’s to collect it back from customers. And Dominion’s larger customers, including industrial, large retail and data center users, will see no rebates. A subcommittee of the Energy Commission of Virginia will be meeting September 21 with RGGI as the main agenda item.
Virginia first joined RGGI under former Governor Ralph Northam (D) and required the generation firms to buy allowances for three years, 2021 through 2023. Those twelve auctions netted the state about $828 million. Former Governor Glenn Youngkin (R) ordered the regulation suspended, an action later voided by the courts, but Virginia skipped the next ten auctions.
Governor Abigail Spanberger (D) led the push to return Virginia to the compact, which sets a cap on electricity-related carbon emissions. That cap is set to decline substantially faster than originally planned starting in 2027, as was explained recently by the Department of Environmental Quality in this presentation.
As some of the slides make clear, there is a major gap between the amount of carbon emissions coming from Virginia’s power producers, 33.4 million tons in 2025, and the carbon allowances Virginia has available to sell, 20.4 million allowances in 2027 and 12.8 million by 2030. The tension between supply and demand plays a major role in the cost of allowances.
The presentation also explains that the amended state regulation to implement the more stringent RGGI regime, adopted by the other states before Virginia rejoined, will be done by the Spanberger administration with no public comment period or even a vote by the Air Pollution Control Board. The 2026 General Assembly suspended the normal rules for its adoption.
