The RGGI participating states are committed to comprehensive, periodic review of their CO₂ budget trading programs, to consider successes, impacts, and design elements (Program Review). The RGGI states completed the First Program Review in February 2013 and completed the Second Program Review in December 2017, resulting in the 2017 Model Rule.  The states completed the Third Program Review in July 2025, and announced updates to RGGI design, detailed below.

Summary of Program Review Changes

Updated RGGI Model Rule

The 10 states participating in the Regional Greenhouse Gas Initiative (RGGI) have agreed to strengthen their regional carbon dioxide (CO₂) emissions cap through 2037, starting in 2027, and establish new mechanisms to protect energy affordability. These updates will ensure the longstanding bipartisan initiative’s continued success in promoting clean air, health and economic benefits across the region. States also agreed to launch their next Program Review no later than 2028, as part of their commitment to regularly evaluate their CO₂ budget trading programs. The next Program Review will consider factors such as changes in energy policy, the pace and scale of electricity load growth, progress in clean energy deployment, and ongoing efforts to ensure energy affordability.

The updates are designed to:

• Provide stability and certainty to market participants, including power producers who purchase allowances to match their emissions and developers of new electricity generation resources.
• Ensure access to sufficient RGGI allowances to meet expected energy demand and bolster price protection for consumers. RGGI states will continue to invest the proceeds from those allowances into programs that lower electricity bills and provide economic benefits to local communities, including energy efficiency, renewable energy, and bill assistance programs.
• Confirm states’ long-term commitments to energy affordability, public health, and the environment, maintaining an economic climate in which innovative companies and the region’s workforce thrive.

Background

The participating states of the Regional Greenhouse Gas Initiative (RGGI) began the Third Program Review in the Fall of 2021 to consider design elements, impacts, and potential changes to their CO₂ budget trading programs. As an outcome of the Third Program Review, the participating states have developed an updated Model Rule, which the states will use to revise their individual CO₂ budget trading programs.

The updated Model Rule was developed through careful consideration of technical analysis and multiple rounds of input from a wide range of stakeholders across the region. Stakeholder comments received during the Third Program Review are posted on the RGGI.org website. The Model Rule updates are summarized below.

Summary of Changes to the RGGI Model Rule

Updates to the Regional Base CO2 Allowance Budget (XX-5.1): The updated Model Rule reduces the regional emissions cap in 2027 to 69,806,919 tons of CO₂ from 75,717,784 tons under the previous Model Rule (Figures 1 and 2). Allowances decline by an average of 8,538,789 tons per year, which is approximately 10.5% of the 2025 budget, thereafter through 2033. Then, from 2034 through 2037 the cap will decline by 2,386,204 tons of CO₂ annually, which is approximately 3% of the 2025 budget. Subsequent years are set to match the 2037 emissions cap. No adjustments are made to banked allowances, which continue to be available for compliance¹.  Setting the regional cap beyond 2037 will be addressed in the next RGGI Program Review, to begin no later than 2028.

This figure compares the current regional base cap (light blue) with the updated cap trajectory (dark blue). The orange and yellow lines display the total updated regional cap if all allowances are released from the updated first and second Cost Containment Reserve tiers, respectively.

This figure compares the current regional base cap (light blue) with the updated cap trajectory (dark blue). The orange and yellow lines display the total updated regional cap if all allowances are released from the updated first and second Cost Containment Reserve tiers, respectively.

¹ As of July 2025, the estimated bank of privately held allowances in excess of RGGI compliance obligations is around 67 million tons.

Implements an Additional Cost Containment Reserve (XX-5.3(d) and XX-9): To ensure availability of RGGI allowances to meet grid reliability needs and protect against cost volatility, the updated Model Rule contains language to revise the existing Cost Containment Reserve (CCR). The CCR is a reserve of allowances made available at auction if the auction clearing price exceeds a predetermined trigger price. The update includes increasing the size of the CCR and implementing a second tier of CCR allowances available at auction at a higher trigger price (Figure 2). 

• The Model Rule contains language to set a fixed quantity of CCR tier 1 and tier 2 allowances, beginning in 2027 and each year thereafter.
• Beginning in 2027, each CCR tier will include a total of approximately 11.75 million allowances for the ten states participating in the Third Program Review.
• All CCR tier 1 and tier 2 allowances will be fully fungible.
• CCR tier 1 allowances will be released at auction according to the same process as in current RGGI design. CCR tier 1 allowances will be made available immediately in any auction in which demand for allowances at prices above the CCR tier 1 trigger price exceeds the initial offering of allowances at that auction. CCR tier 1 allowances will only be sold at or above the CCR tier 1 trigger price.
• CCR tier 2 allowances will be made available immediately in any auction in which demand for allowances above the CCR tier 2 trigger price exceeds the initial offering of allowances and the available CCR tier 1 allowances. CCR tier 2 allowances will only be sold at or above the CCR tier 2 trigger price.
• The CCR tier 1 trigger price will match the current CCR’s price trajectory of $19.50 in 2027, increasing by 7% annually thereafter.
• The CCR tier 2 trigger price will be set at $29.25 in 2027, increasing by 7% annually thereafter.

If the entire first tier of CCR allowances is released and sold in every year, the updated regional cap trajectory will provide a 74% cap reduction by the year 2037, relative to the 2025 cap. If both tiers of CCR allowances are released and sold in every year, the updated regional cap trajectory will provide a 60% cap reduction by the year 2037, relative to the 2025 cap (Figures 1 and 2). These figures do not include the existing bank of allowances, which will be available for compliance and thus provide an additional source of cap flexibility.

Replaces Emissions Containment Reserve (XX5.3(e)) with Increased Minimum Reserve Price (XX-9): The updated Model Rule increases the minimum reserve price, the lowest price at which RGGI allowances may be sold at auction. In current RGGI design, in addition to a minimum reserve price, there is an Emissions Containment Reserve (ECR), which is a reserve of allowances that can be withheld from an auction if the auction clearing price falls below a predetermined trigger price. Beginning in 2027, the update Model Rule removes the ECR and replaces it with an increased minimum reserve price that matches the existing ECR trigger price trajectory. The new minimum reserve price is $9.00 in 2027, increasing 7% annually thereafter. As a result, rather than a fixed number of allowances being withheld under the ECR if the auction price falls below this price, all allowances will simply be withheld below this price (Figure 2).

Figure 2: Summary of RGGI Regional Allowance Cap Updates

Removes Offsets from RGGI Design Beginning in 2027 (XX-10): The updated Model Rule eliminates language regarding RGGI offset allowances. Under past and current RGGI design, certain projects were eligible for the award of RGGI offset allowances, which could be held and traded in the same way as RGGI CO2 allowances, and used for compliance up to a set limit².

Beginning in 2027, RGGI offset allowances will no longer be awarded for any project categories included in previous versions of the Model Rule. Any already awarded offset allowances could still be used for compliance, subject to the existing limits on their use.

Miscellaneous Updates:

• Definitions (XX-1): The definitions for several terms have been edited for clarity and updated or removed to match corresponding updates throughout the Model Rule.
• Monitoring, Reporting & Recordkeeping (XX-8): Section XX-8 in the updated Model Rule has been streamlined for monitoring, reporting, and recordkeeping requirements.
• Other: Certain references have been updated or corrected throughout the Model Rule for clarity and consistency with the changes discussed above.

² To date, only one entity has developed a RGGI offsets project, resulting in an award of 53,506 tons of CO2 offsets eligible for compliance. 

Additional Commitments Alongside the Model Rule

State Legislation and/or Rulemaking: Each participating state commits to seek to establish in statute and/or regulation amendments to its CO₂ budget trading program substantially consistent with the updated Model Rule. Each state commits to work to adopt its respective program changes as soon as practical, to be effective on January 1, 2027.

Fourth RGGI Program Review: The RGGI participating states commit to beginning a Fourth Program Review no later than 2028. The Fourth Program Review will provide an early opportunity to evaluate the performance of the changes agreed to in the Third Program Review and to adjust RGGI elements if needed to ensure the initiative’s continued success in contributing to a reliable, affordable, clean electricity supply. As part of this review, the states will:

• Evaluate the early performance of the program changes implemented as part of the Third Program Review, together with the changes to the electricity grid, technological and policy developments, and program benefits and costs over the next few years.
• Consider and take input on further commitments beyond 2037, as well as adjustments to the RGGI cap trajectory in earlier years if needed to ensure reliability and affordability.
• Further engage stakeholders on the design of existing and potential new RGGI elements that will continue to ensure a clean, affordable, reliable, and equitable electricity supply, consistent with state goals and requirements and grid operational needs.

Unsold Allowances: The participating states commit to removing from circulation all standard RGGI CO2 allowances which are offered for sale but remain unsold at the end of each auction.

Supporting Materials

• Updated Model Rule (redline)
• IPM Electricity Sector Modeling
• Modeled Stability Mechanisms
• Bills Analysis

Previous Announcements on the Third Program Review

On February 2, 2021, the RGGI states released a statement announcing the plan for the Third Program Review, and in Summer 2021 the states released a preliminary timeline for conducting the Third Program Review. In November 2022, the states released a Program Review Update, followed by a further Program Review Update in September 2024. 

To support the Third Program Review, the states:

• Conducted technical analyses, including electricity sector modeling, to inform decision-making related to core Program Review topics, such as the regional CO₂ emission cap.
• Solicited input from communities, affected groups, and the general public on the Program Review process and timeline, core topics and objectives, modeling assumptions and results, and other policy and design considerations.
• Convened independent learning sessions with experts and other interested parties on key design elements.

Public Engagement

Public participation is a key component of a successful Program Review. The RGGI states conducted public engagement throughout the Third Program Review, including periodic public meetings and accompanying open comment periods, to share updates and solicit public feedback.

Public Comments: For a list of public comments received to date, click here.

Meeting Schedule

The following schedule reflects meetings held and currently scheduled for Program Review. The schedule will be updated as additional meetings are scheduled.

Meeting Materials

The below materials accompanied meetings and announcements throughout the Program Review process.

Additional Materials