Overview

Description

The Regional Greenhouse Gas Initiative (RGGI) launched in 2009 and is the first mandatory GHG ETS in the United States. It started operating with ten states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont). RGGI’s development was based on the “2005 RGGI Memorandum of Understanding” (MOU) and on the “2006 RGGI Model Rule”. Through statutes or regulations based on the Model Rule, each state then established individual CO2budget trading programs. New Jersey withdrew at the end of the first control period in December 2011 and rejoined in 2020. Virginia joined in 2021 and left in December 2023. Pennsylvania formally participated from 2022 but was prevented from full participation by court injunctions; it withdrew in November 2025. In February 2026, Virginia's Governor signed legislation requiring the state to refile regulations to rejoin RGGI within 90 days. RGGI covers power sector emissions in participating states. In 2020, it covered around 14% of the aggregate participant states’ emissions; in 2021, 228 facilities were covered by the state regulations. The aggregate cap will decrease by 30% compared to 2020 between 2021 and 2030. Under the ETS, covered entities must surrender allowances for all their covered emissions. Covered entities obtain most of their allowances through regular auctions, while some states have “set-aside” accounts from which they may transfer a limited number of allowances to entities’ compliance accounts. RGGI has completed three program reviews. The third review, concluded in July 2025, introduced reforms taking effect from 2027, including a revised cap trajectory, an expanded cost containment reserve, a higher auction price floor, and a phase-out of new offset credit awards.

Recent Developments

In July 2025, the ten participating RGGI states released the results of the Third Program Review. Effective from 2027, the reforms include: a tightened cap declining by approximately 8.5 million short tons CO2 per year from 2027 to 2033, then by approximately 2.4 million short tons per year from 2034 to 2037; an expanded two-tier cost containment reserve of approximately 11.75 million allowances per tier, with trigger prices of USD 19.50 and USD 29.25 in 2027; a minimum reserve price rising to USD 9.00 in 2027 and increasing 7% annually thereafter; and a phase-out of new offset credit awards beginning in 2027. In November 2025, Pennsylvania formally ended its RGGI participation through its fiscal code budget bill (House Bill 416). In February 2026, Virginia Governor Abigail Spanberger signed House Bill 29 directing the state's Department of Environmental Quality to file regulations to rejoin RGGI within 90 days.

Coverage

RGGI covers CO2 emissions from fossil fuel electric generating units (i.e., fossil fuel-fired stationary boilers, combustion turbines, or combined cycle systems). RGGI covers CO2 emissions only.

Pricing and Allocation Approaches

Auctioning

Compliance Approaches

Other

Relation to Other Compliance CPIs

Operators in Massachusetts need to meet their compliance obligations under both the Massachusetts ETS and RGGI.

Covered Sectors

Electricity and heat