East Coast states face a surprising opportunity in the midst of the fossil-fuel-focused Trump presidency: hundreds of millions of dollars in new climate funding.
Money is pouring in from the Regional Greenhouse Gas Initiative, the cap-and-trade system for the electricity sector in 11 states. In the first half of 2026, RGGI auctions brought in about $1.3 billion by selling allowances for power plants to emit climate pollution. That’s a 70 percent jump from the same period last year, thanks to soaring power demand, Virginia’s reentry into RGGI and a Trump-shaped bottleneck in renewable energy development.
The windfall offers states a chance to boost their own climate programs just as federal support withers.
“This is a big opportunity,” said Brittany Baker, Maryland director for the Chesapeake Climate Action Network. “States need to take the helm and ensure that … our climate programs survive. RGGI is one of the opportunities to do that.”
But spiking electricity prices may have reordered states’ priorities — putting lowering power bills above reducing emissions.
In New Jersey, Democratic Gov. Mikie Sherrill’s administration is using RGGI funds to maximize utility rebates. New York also plans to reduce bills, steering part of its unanticipated RGGI windfall toward programs otherwise funded by ratepayers. And lawmakers in Virginia, which just rejoined RGGI after an almost three-year hiatus, threw out their old funding formula to earmark half the incoming money for bill rebates.
Supporters say those kinds of moves will shore up the political durability of the cap-and-trade system — even if that means more of the climate benefits come from the carbon price itself, rather than what the money’s spent on.
That could buy time, climate advocates hope, for other programs to bear fruit.
Kim Coble, executive director of the Maryland League of Conservation Voters, called it “politically understandable” to use RGGI money for bill rebates. But, she added, “there’s room to ensure it’s a temporary thing” that doesn’t drain investment from climate programs.
“If the goal is to bring energy bills down, OK, we’re gonna help you temporarily — while we do these other things that will save [money] in the long run,” she said.
Even if states did funnel all RGGI revenue to climate programs, it wouldn’t be close to enough to offset the billions of dollars President Donald Trump has axed. The market’s high proceeds also reflect the rollback of climate policies.
By restricting new supplies of renewable energy, the Trump administration likely helped to push the carbon market’s auction prices up to a record $35 per ton. Generally, a higher price reflects higher demand to burn fossil fuels.
“The big picture is that we’re not making enough progress toward slowing climate change,” said Maryland state Sen. Jim Rosapepe, Democratic vice chair of the Budget and Taxation Committee. “[RGGI] wouldn’t be raising a lot of money if we were.”
Subsidizing power bills
As electricity prices rise, more states could soon start following the example of New Hampshire.
Each state determines how to spend its own RGGI revenues, and the Granite State has long been an outlier. Most states have historically favored energy efficiency investments; RGGI’s most recent analysis found that such programs accounted for 46 percent of 2024 spending, compared to 23 percent that went toward bill assistance.
But in New Hampshire, almost all RGGI money goes to residents as a utility bill credit. In 2024, that meant nearly $61 million in rebates.
That’s helped the system survive in a state where Republicans have held a governing trifecta since 2021. The Republican-controlled state Legislature recently voted to continue participating in RGGI.
“New Hampshire ratepayers are economically better off due to the state’s participation in RGGI,” Robert R. Scott, commissioner of the New Hampshire Department of Environmental Services under Republican Gov. Kelly Ayotte, wrote to lawmakers earlier this year.
Virginia lawmakers have made a similar calculation.
The state received about $827 million from RGGI between 2021 and 2023, when former Republican Gov. Glenn Youngkin pulled Virginia out of the market. Those funds were earmarked for flood prevention and energy efficiency.
During that period, RGGI cost the average Dominion Energy customer about $4 per month. Now, Virginia’s largest utility says customers will pay RGGI costs closer to $10 to $13 per month.
In response, Virginia lawmakers in June inserted a provision into the state budget earmarking almost half the state’s RGGI revenues for a new utility rebate for homes, churches and small businesses. Surging RGGI revenues mean Virginia expects do that while still maintaining funding for climate-related programs at roughly the same level.
The new credit “is a way to make sure that the benefits of rejoining RGGI is felt by every ratepayer and small business across the commonwealth,” said Virginia Gov. Abigail Spanberger (D).
The move essentially turns the cap-and-trade program into a way for the state’s data centers and other large businesses to subsidize residents’ power bills.
Such a policy design turns RGGI into an “affordability strategy” as well as a climate tool, said Dallas Burtraw, a research fellow at Resources for the Future.
Virginia’s rebate is estimated to be about $3 per month. But according to modeling from Resources for the Future, the commonwealth could potentially lower bills long-term by more than RGGI’s costs.
“The higher the RGGI price, the greater the reduction for electricity prices for households,” Burtraw told Virginia lawmakers in June as they considered that change. At the same time, he added, RGGI would continue to drive emissions reductions regardless of where the state spends the money.
“A carbon market like this is widely viewed by economists as the most effective way to achieve emission reductions,” he said.
Durable results?
Some RGGI opponents see an opportunity in the rebate debate.
The New Jersey Business and Industry Association is making a case for the state to leave RGGI and to replace it with a flat, $7-per-ton fee to raise a similar amount of revenue.
Ray Cantor, NJBIA’s deputy chief government affairs officer, said he’s been talking to lawmakers about it and anticipates legislation to be introduced this session.
Cantor argues that such a policy would provide funding for the kinds of initiatives that RGGI funds were being spent on, while also resulting in ratepayer savings, pointing to a white paper from economic consulting firm Tabors Caramanis Rudkevich. He also argues that RGGI is pushing emissions outside its member states, rather than reducing them overall — a concept known as leakage.
“It makes no sense to have a program intended to reduce carbon emissions that only results in increased costs and more carbon emissions,” he said.
A spokesperson for Sherrill said the New Jersey governor is focused on freezing utility rates, accelerating energy generation and advancing an all-of-the-above energy strategy.
“We will continue working to ensure RGGI aligns with these priorities and builds upon the progress underway,” spokesperson Darwin Pham said. “We look forward to working closely with our RGGI partners to ensure the initiative continues advancing cleaner, reliable energy while driving long-term affordability.”
Most climate advocates would prefer to see RGGI funding go toward directly cutting emissions. Those programs do more to hold down costs over the long term compared to temporary bill credits, they say.
For instance, energy efficiency lowers the peak demand on the grid, which means utilities build and procure less –— so everyone pays lower prices. Averting pollution also improves public health, bringing more economic benefits.
Those dynamics are why RGGI’s history of returning $11 billion to states has yielded closer to $23 billion in total energy savings, said Jamie Dickerson, a senior director at Acadia Center, which advocates for climate policy across the northeast.
“We totally understand that in this affordability environment … just providing direct bill credits is a helpful way to give relief to those ratepayers,” he said.
But each rebate, he added, is a “one-time shot” that doesn’t accumulate into a better, cheaper power system the way energy efficiency does.
That’s why “durable, long-lived energy efficiency savings represent the highest and best use of overall funds,” he said, so that “maybe we actually shrink the need to do, year after year, single-shot discounts.”
Marie J. French contributed to this report.
