Virginia is rejoining the Regional Greenhouse Gas Initiative on July 1, 2026, ending a two-and-a-half-year absence from the multistate carbon market. Governor Abigail Spanberger signed budget legislation in February 2026 directing state agencies to take the steps necessary to resume participation, after a Floyd County judge ruled that the 2023 withdrawal under Governor Glenn Youngkin was unlawful. For consumers, the return means RGGI-related charges will reappear on electricity bills in the second half of 2026, and auction revenue will once again fund flood-resilience projects and low-income weatherization.
What RGGI Is and Who It Covers
RGGI is a cooperative cap-and-trade program among Eastern states that sets a regional ceiling on carbon dioxide emissions from power plants and lowers it over time. Each state issues a fixed number of allowances and sells them at quarterly auctions run by RGGI, Inc. Plant operators must hold enough allowances to cover their actual emissions, and the declining cap pushes the electricity sector to cut carbon year after year.1RGGI, Inc. Elements of RGGI
In Virginia, the program applies to fossil fuel-fired electric generators with a capacity of 25 megawatts or greater. The Virginia Department of Environmental Quality oversees compliance. Alongside Virginia, the participating states as of 2025 are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Rhode Island, and Vermont.
The program does not directly cover cars, home heating fuel, or industrial facilities outside the electricity sector. Its reach is fossil-fueled power generation above the 25-megawatt threshold.
Virginia’s Path In, Out, and Back
The Clean Energy and Community Flood Preparedness Act, passed in 2020, directed DEQ to build a carbon cap-and-trade program consistent with the RGGI model rule and to auction 100 percent of Virginia’s allowances each year.2Virginia General Assembly. SB 1027 Clean Energy and Community Flood Preparedness Act3Virginia Code Commission. Virginia Code 10.1-1330 – Clean Energy and Community Flood Preparedness Virginia began auctioning allowances in 2021, the first Southern state to join.4Southern Environmental Law Center. Virginia Is So Back During roughly three years of participation, the state generated more than $827 million in auction revenue, and power-sector carbon pollution dropped by an estimated 22 percent.
Governor Youngkin signed Executive Order 9 shortly after taking office in January 2022, directing DEQ and the State Air Pollution Control Board to begin repealing Virginia’s participation.5Virginia Regulatory Town Hall. Repeal CO2 Budget Trading Program as Required by Executive Order 9 The administration framed allowance costs as a hidden tax on ratepayers. The Board voted to repeal the trading regulation, the repeal took effect on August 30, 2023, and Virginia stopped participating in auctions after the final 2023 cycle.6Virginia Code Commission. 9VAC5-140-6040 – Repealed The withdrawal did not go through the General Assembly.
Why Virginia Is Returning
The Southern Environmental Law Center sued in August 2023 on behalf of four organizations, arguing that the 2020 Act was a legislative mandate the Air Pollution Control Board could not undo on its own.7Southern Environmental Law Center. RGGI Case Transferred to Different Circuit Court
On November 20, 2024, Floyd County Circuit Court Judge Randall Lowe ruled the withdrawal unlawful. Judge Lowe found that the “only body with the authority to repeal the RGGI regulation would be the General Assembly … because a statute, the RGGI Act, requires the RGGI regulation to exist.” Attorney General Jason Miyares appealed, and the judgment was suspended while the appeal proceeded. After Governor Spanberger took office in January 2026, the state dropped the appeal, and on March 5, 2026, the Virginia Court of Appeals acknowledged the withdrawal of the case.
Governor Spanberger signed House Bill 29 on February 20, 2026, directing all state agencies to take the actions necessary to rejoin.8Virginia DEQ. Carbon Trading The law gives DEQ 90 days to repeal the 2023 withdrawal regulation and reinstate the original trading program, with a deadline of May 21, 2026. To move quickly, HB29 exempts these actions from the Virginia Administrative Process Act and removes the Air Pollution Control Board from the process, letting DEQ act alone.
What the Return Means for Your Electricity Bill
Dominion Energy Virginia had recovered RGGI allowance costs through a dedicated rider on monthly bills. Before the withdrawal, a residential customer using 1,000 kilowatt-hours per month was paying about $4.34 per month in RGGI charges; when Youngkin first took office in 2022, the charge was around $2.39 per month. In mid-2024, the State Corporation Commission approved Dominion’s request to zero out the rider.
The savings picture was never as clean as the disappearing line item suggested. Dominion had accumulated a total revenue requirement of roughly $267 million in RGGI compliance costs through mid-2022. Of that, $84 million was recovered through the initial rider and the remaining $183 million was folded into base rates, which did not go away when the rider hit zero.9State Corporation Commission. Final Order, Case No. PUR-2022-00070 Governor Spanberger told the General Assembly that withdrawing from RGGI “did not lower energy costs” and that litigation expenses forced customers to pay more than the program itself had cost them.
With the return, consumers should expect RGGI-related costs to reappear on bills, likely at a similar scale to the pre-withdrawal charge. Fossil fuel plants at 25 megawatts or above will again need to acquire allowances covering their emissions, and utilities will again seek to recover those costs.
Where the Auction Money Goes
The 2020 Act sets a specific formula for distributing auction revenue, and that formula applies again as Virginia rejoins:3Virginia Code Commission. Virginia Code 10.1-1330 – Clean Energy and Community Flood Preparedness
- 45 percent to the Community Flood Preparedness Fund, which supports grants and loans to localities for flood prevention, coastal resilience, and nature-based solutions to sea-level rise and recurrent flooding.
- 50 percent to the Department of Housing and Community Development for low-income energy efficiency programs, including weatherization of qualifying homes through insulation, air sealing, and heating and cooling upgrades.
- 3 percent to cover DEQ’s administrative costs for running the cap-and-trade program and for statewide climate change planning.
- 2 percent to DHCD, in partnership with the Department of Energy, to administer and implement the low-income energy efficiency programs.
During Virginia’s 2021–2023 participation, the more than $827 million in auction revenue funded local flood mitigation projects and weatherization for lower-income households. Both funding streams paused during the withdrawal and are expected to resume in the second half of 2026.
Key Dates for the 2026 Return
- February 20, 2026: Governor Spanberger signs HB29, directing agencies to rejoin.
- May 21, 2026: DEQ’s deadline to repeal the 2023 withdrawal regulation and reinstate the trading program.
- July 1, 2026: Virginia formally resumes RGGI participation.
- September and December 2026: Virginia’s first auctions back in the program.
- January 1, 2027: Deadline for a second regulatory action aligning Virginia’s program with the latest RGGI model rule updates.
The 2026 base emissions budget is half a full-year allocation because Virginia is rejoining mid-year: 11.48 million tons of CO2, with a cost containment reserve of 1.148 million tons.8Virginia DEQ. Carbon Trading Plants that had no allowance obligation during the gap will face compliance obligations again starting in the second half of 2026.