Virginia HB397 Charts a Road for Re-Entry into RGGI

What’s Happened?

HB397, a bill which requires Virginia to resume participation in RGGI, has just passed the Senate. In terms of next steps, it must move to the Governor’s office.

Key Impact on RGGI – Supply-Side 

• Virginia’s renewed in participation in RGGI would result in an addition to the program cap to account for the entities (re)entering the program. It is particularly interesting because Virginia was not a part of RGGI when the latest program review was being finalized.  
• Accordingly, it remains to be seen on what the quantum and the slope of the cap is after Virginia is back in the program. 

Key Impact on RGGI – Demand-Side 

• Virginia’s 2025 generation data from EIA shows continued reliance on natural gas i.e., 57.26% in the state’s power mix. While clean energy output is increasing on a year-to-date basis, monthly generation shares remain weighted toward natural gas. Total in-state electricity generation reached 105.97 TWh in 2025, up 3.19% YoY. Clean energy sources (hydro, nuclear, biomass, solar, and wind) collectively contributed 37.16%.  
• Since, natural gas makes up most of Virginia’s electricity generation, power-sector emissions remain high. Because the gas share is large, the potential for decarbonization is also high. Accordingly, it will likely be the case that Virginia will be a net-buyer in RGGI. 

Figure 1 Total Energy Generation by Source in Virginia. Source: EIA

Table 1 Total Energy Generation by Source in Virginia. Source: EIA

What’s Next 

• Virginia must initiate procedural steps to operationalize re-entry. 
• Coordination with RGGI Inc. and participating states on auction scheduling. 
• Market participants will monitor confirmation of first re-entry auction timing. 
• Forward contracts may adjust in anticipation of incremental compliance demand. 
• Implementation timing remains the key variable for 2026–2027 RGGI market positioning. 

References 

• Virginia Legislative Information System: Bill History and Votes (HB397). 

Analyst Contact 

• Vanshika Goyal (Vgoyal@cKinetics.com) 
• Mitul Kaushal (mkaushal@cKinetics.com)