Democratic candidates win in New Jersey and Virginia

New Jersey, currently the highest-emitting state in RGGI after New York, will be run by former US representative Mikie Sherrill starting in January. She is a member of the Democratic party and supports the state’s continued participation in RGGI. The Republican candidate she defeated, Jack Ciattarelli, had pledged to withdraw New Jersey from RGGI if elected.

Virginia will see the governorship switch from Glenn Youngkin – a Republican who withdrew Virginia from RGGI in 2023 after the emissions-heavy state had joined under its previous governor in 2021 – to Abigail Spanberger, a democrat who ran on a platform of lowering consumers’ energy costs and pledged to bring the state back into RGGI.

Renewed certainty as to New Jersey’s continued membership in the program, added to the potential that another source of significant demand for emission allowances will re-join, was clearly reflected in RGA prices on the secondary market with the steep RGA price rise immediately following election results. These factors continue to be bullish for prices and are likely to increase liquidity.

Whether Virginia rejoins RGGI is not solely dependent on who is governor, however. Exactly a year ago a state circuit court judge ruled that Youngkin’s unilateral withdrawal from RGGI was illegal because it can only be done by an act of the state legislature. The RGGI repeal was ordered to be vacated by the court, but the Youngkin administration appealed that ruling – Virginia’s status in RGGI thus remains pending. Even if the path is cleared for re-joining, it is uncertain how the state would resume participation in RGGI: power contracts based on past emission levels have expired, and Virginia regulators were not part of RGGI’s recently concluded program review that resulted in tighter caps for participating states going forward. A new allowance budget would have to be set for Virginia.