Energy Market Update - Sustainability Corner

PJM: New Jersey Advances Adoption of Updated Model Rule for RGGI; RGGI Auction 73 Clears at All-Time High of $37.65/ton

• New Jersey is moving forward with adopting the latest RGGI program changes and is on track to complete rulemaking by 2027.
• DEP acknowledged market volatility, load growth, and federal energy policy changes, but indicated those topics will be addressed in the next RGGI program review.
• The proposal did not mention the RGGI scoping process that was announced earlier this year.
• Separately, RGGI Auction 73 cleared at a record $37.65/allowance, up 7.6% from the June 2026 auction.
• Despite increased allowance supply in 2026, market participants remain focused on expected tight long-term supply-demand fundamentals.

PJM: Illinois EPA Releases Illinois Comprehensive Climate Action Plan

• Illinois EPA released the Comprehensive Climate Action Plan (CCAP), providing a statewide roadmap to achieve net-zero emissions by 2050.
• The plan reports Illinois has reduced greenhouse gas emissions by 32% since 2005, including a 60% reduction from the power sector.
• Despite this progress, the CCAP concludes that additional legislative and policy action will be needed to meet the state's long-term emissions goals.
• Proposed actions span transportation, buildings, industry, agriculture, and methane reduction, including EV incentives, building electrification, energy efficiency measures, industrial emissions standards, and methane monitoring.
• If adopted, the modeled policies could reduce emissions by 72% below 2005 levels by 2050 and generate an estimated $21 billion annually in net benefits.
• Implementation depends on future action and appropriations by the Illinois General Assembly, making legislative activity the key factor to watch.

PJM: West Virginia Sues Pennsylvania Over Limiting Energy Credits

• West Virginia filed a lawsuit challenging Pennsylvania's in-state energy credit requirements, arguing they unfairly favor Pennsylvania generators.
• The suit targets restrictions on solar and Tier II energy credits that previously could be supplied from across the PJM region.
• West Virginia claims the rules have increased compliance costs and excluded out-of-state generators from the market.
• Pennsylvania's regulator has previously advocated for changes to Tier II requirements due to rising compliance costs.
• The case could have implications for other state clean energy programs that include similar in-state eligibility requirements.

ISO-NE: Massachusetts Governor Issues Executive Order on Data Centers

• Massachusetts Governor Maura Healey issued an executive order establishing binding requirements for new and expanded data centers with peak electric demand exceeding 25 MW.
• The order requires large data centers to obtain local community support and secure sufficient new clean energy resources to match their annual electricity consumption.
• Eligible clean energy resources include those that qualify under the state's Clean Energy Standard, including solar, wind, small hydroelectric, landfill gas, geothermal, and new nuclear.
• Data centers that do not procure adequate clean energy will be subject to alternative compliance payments, with funds directed to a new Ratepayer Protection Fund.
• The order also seeks to protect ratepayers by requiring data centers to bear infrastructure-related costs, address greenhouse gas and water resource impacts, and meet new reporting and transparency requirements.
• Massachusetts agencies will provide additional guidance and recommendations through annual reporting beginning in 2027.

LevelTen Energy’s snapshot on U.S. and EU Power Purchasing Agreement (PPA) pricing is below. For more information on LevelTen please visit www.leveltenenergy.com.

EPA Finalizes Repeal of 2024 Power Plant Regulations, Delivering $300+ Billion in Savings, Proposes Repeal of All Remaining Greenhouse Gas Emissions Standards for Power Plants

The EPA announced the repeal of most of the 2024 power plant greenhouse gas standards and proposed rescinding the remaining federal GHG requirements for the power sector, describing the move as a significant shift aimed at supporting reliable, affordable baseload power generation. The agency states the actions could reduce compliance costs and provide greater regulatory certainty for coal and natural gas generation, while opening a public comment and review process before any remaining changes are finalized.

Read the full announcement for additional details and ongoing regulatory developments.

EPA Finalizes Repeal of 2024 Power Plant Regulations, Delivering $300+ Billion in Savings, Proposes Repeal of All Remaining Greenhouse Gas Emissions Standards for Power Plants | US EPA

CARB Issues 520,000 New Offset Credits, Though None with Direct Environmental Benefits, Continuing Muted Issuance Year of 2026

The California Air Resources Board (CARB) issued approximately 520,000 new offset credits to mine methane capture projects, continuing a limited pace of offset issuance in 2026 and marking a second consecutive issuance period focused on a single project type. The issuance did not include projects with direct environmental benefit classifications, highlighting the continued scarcity of new offset supply entering California's carbon market this year

ARB Offset Credit Issuance | California Air Resources Board

Carbon Border Adjustment Mechanism (CBAM)

What is CBAM?

The Carbon Border Adjustment Mechanism (CBAM) is a European Union policy designed to apply a carbon cost to certain imported goods based on their embedded greenhouse gas emissions. CBAM aims to reduce "carbon leakage," where production shifts to countries with less stringent climate regulations.

Why was CBAM created?

The EU created CBAM to ensure imported products face a carbon cost like products manufactured within the EU under the EU Emissions Trading System (EU ETS). The goal is to promote fair competition while supporting the EU's climate objectives.

Who is affected?

CBAM currently applies to imports of:

• Iron and steel
• Aluminum
• Cement
• Fertilizers
• Electricity
• Hydrogen

Companies importing these products into the EU must account for the emissions associated with their production.

What's happening now?

CBAM's transitional reporting phase ended in 2025. As of January 1, 2026, CBAM entered its definitive phase, introducing compliance obligations for affected importers, including emissions reporting and CBAM certificate requirements.

Why does this matter to businesses?

CBAM creates a financial incentive for suppliers to measure, reduce, and disclose carbon emissions. Companies that export carbon-intensive products to Europe may face increased reporting requirements and potential carbon-related costs if their products have higher emissions profiles.

Key Takeaway

CBAM represents one of the world's most significant carbon trade policies. Companies with products, suppliers, or customers connected to the European market should understand their emissions footprint and monitor evolving CBAM requirements.

Learn More: European Commission CBAM Portal
https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en

For questions on these items and more please reach out to SustainabilityTeam@Constellation.com and your inquiry will be directed to an inhouse expert.