Delaware carbon taxes have not reduced carbon dioxide emissions
By David T. Stevenson, Director
Center for Energy & Environmental Policy
March 17, 2025
Delaware joined other East Coast states to create the Regional Greenhouse Gas Initiative (RGGI), basically a tax on carbon dioxide (CO2) emissions from power plants. Power plants must buy emission allowances at quarterly auctions and turn them in based on emission levels.
The allowances available at each auction are gradually reduced and allowance prices rise over time. The intent was for coal, oil, and natural gas-fired power plants to somehow reduce emissions or close over time. Other Delaware legislation encourages solar and wind powered generation construction, and energy efficiency to replace closing plants.
The highest emission year was 2005 when Delaware's electric generators emitted 6.9 million metric tons. In 2024 emissions were down to 1.9 million metric tons, about how much China emits every 12 seconds. (Sounds like the tax worked well? In reality, the tax had no impact on lowering emissions, in fact 75% of the so called savings just shifted emissions to other states and the other 25% would have happened without RGGI.)
Importing Power, Exporting Emissions
Delaware's electric demand was 12.1 million megawatt-hours (MWh) in 2005, but the state only generated 8.1 million MWh. So, Delaware had to import power--and thus exported 3.4 million metric tons of emissions to other states. (NOTE: a MWh is about the amount of electricity a household uses in a month.)
Rising Carbon Costs Hurt Delaware's Competitiveness
The early auctions sold emission allowances for a few dollars per ton, but by 2024 the average price was $21 per ton. Delaware's power plants bid into the 13 state regional electric grid in the day-ahead markets, and in 2024 typical bids averaged about $30 per MWh.
Coal and oil-fired power plants emit about a ton of CO2 per MWh, and natural gas about 0.4 tons. A Delaware coal or oil electric generator has to bid about $20 extra per MWh, and natural gas about $9 extra per MWh, so Delaware electric generators don't win a lot of bids.
This resulted in the decline of in-state electric generation to 4.7 million MWh in 2024 from 8.1 million MWh in 2005. That cut Delaware emissions by 2.9 million metric tons, but we imported more power from out of state, and so just exported more emissions.
Delaware's electric demand fell by 0.8 million MWhs as energy-intensive industries left the state, saving 0.7 million metric tons of instate emissions. However, those industries still emitted CO2 in the states they moved to. In Delaware, coal- and oil-fired power generation fell while natural-fired power increased by 2.6 times, cutting emissions by another 1.2 million metric tons. That leaves 0.2 million metric tons saved by other impacts, but the savings were likely wiped out by line losses from importing more power out of state.
Consumers Paying the Price
Meanwhile the cost of RGGI allowances didn't just disappear. Delmarva Power buys power in long-term contracts that make it impossible to track how much cost RGGI is adding to electric bills. However, in Virginia Dominion Energy owns its own power plants and can track RGGI cost as a line item on electric bills.
In 2023 RGGI added $54 a year to electric bills when RGGI allowances sold for $13 per ton. RGGI has a target price of $24 per ton, which would add $100 per year for residential customers and thousands for businesses.
Time to End RGGI
Ending RGGI would save money, keep more power generation in Delaware, and contribute to electric grid reliability without increasing CO2 emissions.
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For Further Research, below are previous Caesar Rodney Institute research articles on RGGI and electricity rates in Delaware:
Delaware Green Policies Have Failed and Become Dangerous
Think Your Electric Bill Was High? Here's What's Coming