Much of our writing and analysis at EGPS relates to price of key energy commodities such as electricity and natural gas. We expect that prices for energy and power will vary from region based on the unique supply and demand features and refer to the difference in price from place to place as “basis”. And the ability to purchase something in one place or at a place or time and either transport or store it for sale at a different location or time at a higher price as “arbitrage”. An underlying assumption of all this is that the commodity in question is fungible, in that a MWh of electricity or MMBtu of natural gas has no distinction from another - other than its location and availability at any one time.  As a corollary to power markets, in recent years we have been increasing our coverage and analysis of carbon emissions, a byproduct of the generation of electricity or burning of fuels such as natural gas and often referred to by economists as an “externality”.  In the atmosphere, carbon dioxide is fungible in that a ton emitted from New York is indistinguishable from one produced in California, for example. Yet, the markets that surround carbon do not price carbon the same way due to the myriad rules embedded within in each market. The key markets that we follow at EGPS include Washington State, California/Quebec, and the Northeast Regional Greenhouse Gas Initiative (RGGI). These programs affect the power prices and generation stacks in each of their states so in this blog, we will talk a little about how we track and analyze the various carbon programs and prices in the US.

On the west coast, our coverage begins with monitoring two markets (California/Quebec and Washington State). The figure below displays the daily price movements for both carbon markets. Such prices are tethered to a secondary trading market for allowances, which are ultimately tethered to the unique rules governing supply and demand for allowances, and particularly the caps set in each state.

Figure 1 | Carbon Daily Settlement Prices – Year-on-Year Comparison

As shown in the left pane, since 2025 (red), carbon prices in CAISO have ranged from the high $20’s to low-to-mid $30’s per metric ton most recently for 2026 (blue). The right pane shows Washington Carbon prices which over that same time ranged from the mid $50’s to high $70’s at the start of 2026 and have since fallen steadily. We discussed this dynamic in the Carbon Market Flash “Slow Strides Towards Convergence”. The article noted the flush hydro conditions in the Pacific Northwest that have helped to ease the demand for emission allowances so far this year. Meanwhile, the article notes the recent step up in allowance prices in CAISO in the secondary market due to a combination of tighter markets and anticipation of changes to the supply rules. Within CAISO, the article points out the distinction between NP15 and SP15 in the forward power curve and how solar rich SP15 often has low and zero carbon MWhs sequestered in Southern California. 

Comparatively, the Washington Carbon outlook is much simpler and often comes down to how healthy the hydro year turns out to be. When good, less natural gas is needed and when bad, more is needed as are increased imports that include coal plants from around the west.  Our Washington Carbon Dashboard highlights the key drivers of emissions in Washington including load and net load (load minus price taking renewables including wind and hydro), hydro and wind generation, net imports, heating demand, gas nominations, and vehicle miles driven which affect transportation emissions. Net load year to date has been well below levels in 2024 and 2025 due to the abundant hydroelectric output in the region, as shown in Figure 2 which is taken from the dashboard. The outlook for the remainder of 2026, shown in red, is heavily dependent on the rainfall patterns that set up with an El Nino event anticipated in the near-term horizon.

Figure 2 | PNW Hydro Generation Year-on-Year with 2015-19 Avg

Although prices for Washington are still nearly double that of California, the expectation is for an eventual convergence of markets through integration of the programs. For now, the matter is in process and thus the markets remain separate and distinct from each other.

To the east, we follow the evolving market for allowances in the RGGI program. As we have been writing about in recent months, the market for RGGI allowances is rapidly tightening as shown in the recent increase in quarterly auction prices and within the secondary futures market. In recent market flashes in our Northeast Package as well as Special Reports, we have noted the increased price in allowances, discussed the underlying wholesale power conditions and RGGI rule-making process that is driving the increase in prices.  Figure 3 below shows the most recent auction results for RGGI including Auction 72 as an orange dot which returned a settled allowance price of $35 per short ton, which in metric tons as used in CA and WA is close to $39. The green bar shows total auction proceeds which have been nearly $650 million for the last two auctions.

Figure 3 | RGGI Auction Prices and Proceeds

In our special report “RGGI Takeoff” we provided our opinion on the prospect for allowance pricing through the remainder of 2026. Based on rules in place for 2026, a general tightness and reliance on thermal resources throughout the Northeast, and a pace of emissions set to exceed 2025, we anticipate continued strong pricing for allowances through the end of the year. The price for allowances is filtering into wholesale market, and we provided context on this in our special report “There’s Carbon in my Heat Rate”.  In this, we observed escalating heat rates in ISONE and NYISO over the past five years when normalized against load, outages and temperatures while RGGI allowance prices were moving upwards.

If you’d like access to the reports and content referenced in this blog or interested to learn more about the data platforms and dashboards, forecasts, flashes and other services including bespoke consulting services that EGPS provides, please contact us at [email protected]. 

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