Last week I gave an update on RGGI and posed the question whether the Auction 73 clearing price would exceed the Auction 72 price of $35. Today RGGI announced that the Auction 73 price did indeed exceed $35 closing $2.65 higher at $37.65. This post summarizes the impact of the auction.
The RGGI press release stated:
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. Additional details are available in the Market Monitor Report for Auction 73, which is appended.
A quick summary of what I have documented since July
In my last post I summarized four things that happened in quick succession this summer. Two of them are relevant to this result.
In Hochul and RGGI Affordability I quantified the wholesale-market effect of RGGI allowance costs and showed that it contradicts Governor Hochul’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 resource dispatched in that interval — including non-emitting and imported resources that bear little or none of the underlying RGGI cost., I showed the RGGI allowance price has risen from $9.30 per ton in the first full auction of Hochul’s tenure to $35.00 at Auction 72 — a 276% increase. At the Auction 73 cost of $37.65 the increase is 296%. For a typical residential customer, the RGGI-attributable share of the bill was around 4.2% in 2024 but at $37.65 the share is 7.8%.
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