The Regional Greenhouse Gas Initiative held its latest auction for carbon emission allowances last week and produced a price of $19.76 per ton. Because Virginia is no longer a participant, that probably saved electric utility customers another $100 million. 

The March 2025 price, in reality a tax on the use of hydrocarbon fuels, was lower than during 2024, when it peaked at $25.75. The price dropped below $20 a ton largely because the organizers of the auction released more than 8 million allowances from its “cost containment reserve” to better balance supply and demand. 

But the $19.76 price is still 33% higher than the carbon tax Virginia utilities paid in the final auction that included Virginia, in December 2023. Should Virginia return to RGGI, as Democrats led by their gubernatorial candidate Abigail Spanberger will surely promise, that price would likely result in $400-500 million in annual carbon tax receipts.

Governor Glenn Youngkin (R) had the Air Pollution Control Board repeal the regulation that placed Virginia under the RGGI regime. A local circuit court has ruled that action was invalid, but that is on appeal and the same judge recently decided to let the state remain out of the compact pending that appeal. 

The election will probably happen before the appellate court acts. But the Virginia Senate is not up for election this year and remains controlled by Democrats who have shown no inclination to repeal the law they cite as creating the RGGI mandate. The election is unlikely to settle this question, although voters should still be presented with the issue as a strong contrast between the parties.

The Trump Administration’s Environmental Protection Agency has now revoked a key permit for a New Jersey offshore wind development, another possible warning sign that Dominion Energy Virginia’s already-permitted project is not beyond reversal. Permits granted can be later removed (just like the RGGI carbon tax) and the move on the New Jersey project is significant.

The Clean Air Act permit yanked from the Atlantic Shores project near Atlantic City was issued in September under the Biden Administration. It was the EPA itself which filed the motion in February to have the permit remanded to the agency for another review of the project’s environmental impacts. The action followed President Donald Trump’s Executive Order targeting the Biden push for offshore wind. 

The lease area off New Jersey is closer to the shore and would be more visible than Dominion’s project and has sparked a major backlash from Jersey beachfront communities. Before this announcement the project was already in jeopardy from the withdrawal of one of its major backers, the energy giant Shell, which reported and wrote off a loss of $1 billion on the 197-turbine proposal. 

Should Dominion’s 176-turbine project end with a repeal of its federal permits, the financial impact will be multiple billions of dollars and most or all will come from Dominion customers. Wind industry opponents are asking the U.S. Department of Interior for a construction halt on Dominion’s and three other wind farms already under construction on challenges to the permits similar to those used against Atlantic Shores. 

It is likely the Youngkin Administration and Dominion have been pushing back behind the scenes, but the public stance remains that the $10.7 billion project will proceed without impediment and there is no cause for concern.

— SDH