Virginia rejoined RGGI on 1 July 2026, expanding regional cap coverage by close to 30% and adding 11.48M allowances plus 1.148M CCR allowances to the 2026 auctions, prompting this update to our Third Program Review demand-supply outlook. The re-entry lands in an already tight market trading at $41–43, beyond CCR Tier 2 levels for 2027, as data-centre-driven Virginia demand compounds a shortfall in abatement that the tighter post-2027 cap had assumed away.

Executive Summary

Since its inception in 2008, RGGI has cut emissions by more than 50% across ten states and generated over $8.6B for local reinvestment. The program has now changed shape: following HB 29 and Revision A26, Virginia rejoined RGGI on 1 July 2026, expanding cap coverage by close to 30% and adding 11.48M allowances plus 1.148M CCR allowances to the September and December 2026 auctions.

The prices surged above $50 after Virginia’s re-entry was announced on 29 April 2026, then cooled once RGGI confirmed a 60M surplus bank on 8 May 2026, signaled an unspecified market intervention in its Auction 72 notice, and added 5.7M set-aside allowances to the remaining 2026 auctions. Prices have since settled into a range of $41–43. cCarbon estimates the key reason for recent RGA pricing is that there are not enough allowances to go around in 2027+. Pricing is already beyond CCR Tier 2 for 2027, at what is nominally the Tier 2 price for 2032–33.

On supply, Virginia has rejoined at the same cap trajectory at which it left, but post-2027 caps are not notified in statute. We estimate Virginia’s 2027 budget at 20.39M allowances, down 1.73M, plus an estimated 3.43M CCR Tier 1 allowances above the cap. On demand, Virginia enters as a structural net buyer.

Natural gas made up 57% of 2025 generation, and we estimate emissions rising from 30.9 MtCO2e in 2025 to 32.6 MtCO2e in 2026. Data center load is the driver, growing from 4.4 GW in 2026 to 16.6 GW by 2046. The strain shows in PJM, where capacity prices rose 833% YoY and have cleared at the cap for three straight auctions, with the Dominion Zone 65% above the RTO-wide price.

Federal headwinds have not eased. Offshore wind projects across the Northeast still faces cancellations, stop-work orders and legal challenges. The fossil side moved the other way: H2 2025 petroleum generation was 1.25x the prior year, and we estimate H1 2026 coal emissions up 35.85% YoY.

We have therefore consolidated modelling around our new baseline scenario “EIA AEO 2026”, replacing the earlier three-scenario framing; “Contracted RE” and “Renewables Expansion” are no longer credible.

The bank turns negative 2027 onwards and both CCR tiers trigger every year from 2027. Prices are estimated to trade above CCR Tier 2 through the mid-2030s. The 2026–27 set-asides delay bank exhaustion by about a year, which is why prices cooled recently.

List of Figures

Figure 1: RGGI Allowance Price………………………………………………………………………….. 6

Figure 2: RGGI Program Review Scenarios from 2024 Third Program Review…………. 7

Figure 3: Expected RGGI 10-State (Excl VA.) Emissions Forecast…………………………… 7

Figure 4: RGGI New Cap and Previous Cap……………………………………………………….. 10

Figure 5: RGGI New Cap and Previous Cap with CCRs………………………………………… 11

Figure 6: Additional Set Aside Allowances Offered in Auction…………………………….. 12

Figure 7: Allowance Supply in Auction 73…………………………………………………………. 12

Figure 8: Virginia Power Sector Emissions………………………………………………………… 15

Figure 9: Virginia Cap Trajectory………………………………………………………………………. 16

Figure 10: Virginia Post 2027 Cap Trajectory…………………………………………………….. 20

Figure 11: Annual RGGI Power Sector Emissions by State………………………………….. 23

Figure 12: Electricity Generation from Petroleum in H2 2023 vs H2 2024 vs H2 2025……………………………………………………………………………………………………………… 24

Figure 13: Electricity Generation from Petroleum in RGGI States, H2 2023 vs H2 2024 vs H2 2025……………………………………………………………………………………………. 25

Figure 14: Monthly Emissions Across RGGI States……………………………………………. 28

Figure 15: Generation from Coal Across RGGI States………………………………………… 29

Figure 16: Emissions from Coal Across RGGI States………………………………………….. 30

Figure 17: Virginia’s Historical Energy Profile by Fuel Type……………………………….. 32

Figure 18: Emissions from Coal in Virginia………………………………………………………. 33

Figure 19: Virginia’s Annual Electricity Generation (GWh) by Fuel Source…………. 34

Figure 20: Virginia’s Q1 Electricity Generation (GWh) by Fuel Source……………….. 35

Figure 21: 10-Year Annualized Peak Load Growth (CAGR), Dominion Zone vs PJM RTO……………………………………………………………………………………………………………… 36

Figure 22: How Virginia Load Growth Transmits into PJM-Wide Capacity, Reliability and Cost Outcomes………………………………………………………………………………………. 36

Figure 23: PJM Capacity Market Clearing Price by Delivery Year ($/MW-day)……. 37

Figure 24: Weather-Normalized Load Growth, Dominion Zone vs PJM RTO Average……………………………………………………………………………………………………….. 38

Figure 25: Data Center Large Load Adjustment for the 2026 PJM Load Forecast.. 39

Figure 26: Estimated Virginia Emissions…………………………………………………………. 40

Figure 27: RGGI Allowance Demand With Virginia…………………………………………… 45

Figure 28: RGGI Program Allowance Supply with Set Asides and Virginia’s Supply……………………………………………………………………………………………………………….. 45

Figure 29: Demand for Allowances and Supply of Allowances – EIA AEO 2025……46

Figure 30: Annual and Cumulative Surplus of Allowances – EIA AEO 2025………… 46

Figure 31: Demand for Allowances and Supply of Allowances – EIA AEO 2026….. 47

Figure 32: Annual and Cumulative Surplus of Allowances – EIA AEO 2026………… 47

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List of Tables

Table 1: Virginia’s Estimated 2027 Cap……………………………………………………………… 17

Table 2: Virginia’s CCR Tier 1 Allowance Volumes………………………………………………. 19

Table 3: Virginia’s Post-2027 Cap Trajectory and Share of Total RGGI Cap……………. 20

Table 4: Sources of Electricity Generation in RGGI States…………………………………… 24

Table 5: Electricity Generation from Petroleum in RGGI States…………………………… 25

Table 6: H2 2024 & H2 2025 RGGI Emissions by State……………………………………….. 28

Table 7: Monthly Generation from Coal across RGGI States (MWh)……………………. 29

Table 8: H1 2024 – H1 2026 Expected RGGI Emissions from Coal………………………..30

Table 9: H1 2024 – H1 2026 Expected Virginia Emissions from Coal…………………… 33

Table 10: PJM Base Residual Auction Outcomes, 2024/25–2028/29…………………… 37

Table 11: Virginia / Dominion Zone Cost & Load Metrics vs PJM RTO Average…….. 38

Table 12: RGGI Emissions Scenarios…………………………………………………………………. 43

Table 13: Terminology for Scenario Analysis……………………………………………………… 44