NEW YORK – The Regional Greenhouse Gas Initiative (RGGI) took in nearly $38.58 million in its first-ever auction of carbon-dioxide (C02) emissions credits, the regional alliance said today.
“All of the 12,565,387 allowances offered for sale on Sept. 25 were sold at a clearing price of $3.07 per allowance,” said RGGI Inc., the nonprofit organization founded to administer the 10-state emissions cap-and-trade program. That was nearly twice the auction’s floor price of $1.86 per ton, and within the range predicted last week by a research analyst for French bank Societe Generale, who called for a sale price of $3 to $5 per ton. (READ MORE)
“Participants from the energy, financial and environmental sectors took part in the first-in-the-nation auction,” the nonprofit said today, adding that demand “appeared … very strong,” with the 59 bidders submitting bids for more than 51.761 million allowances, “which was four times available supply.”
Proceeds will be distributed among the six states that participated in the group’s first quarterly sale of carbon credits – essentially, permits to pollute – conducted Thursday by auction administrator World Energy (TSX: XWE) and overseen for RGGI by independent market monitor Potomac Economics.
Rhode Island will get nearly $1.35 million, “to be spent on efficiency to benefit consumers, keep energy costs down, and further reduce greenhouse gas emissions,” according to Cynthia Giles, a lawyer with the Conservation Law Foundation’s Rhode Island office.
Massachusetts will get $13.3 million, “to help municipalities find greener solutions to their energy challenges, and help consumers reduce their energy bills,” Gov. Deval L. Patrick said today. “With a difficult winter ahead, we expect to put these resources to work immediately.”
Also taking part in the auction last week were Connecticut, Maine, Maryland and Vermont.
Under the RGGI process, the 10 participating states agreed to stabilize power-sector carbon emissions at their capped level by 2014. Thereafter, the cap will be reduced each year from 2015 through 2018, by a total of 10 percent. The carbon credits can be used by facilities in any RGGI state – including Delaware, New Hampshire, New Jersey and New York, the four states that did not participate in Thursday’s auction, the regional alliance said.
“The first RGGI auction has successfully used market forces to set a price on carbon, and this will send a clear market signal to support the investment in clean-energy technologies,” Pete Grannis, chairman of RGGI Inc. and commissioner of the N.Y. State Department of Environmental Conservation, said in a statement today.
A second RGGI auction is slated for December, with quarterly auctions planned thereafter.
The Regional Greenhouse Gas Initiative (RGGI) is a cooperative cap-and-trade effort of 10 states in the Northeast and Mid-Atlantic regions. Its carbon-trading program is administered by RGGI Inc., a nonprofit corporation created by the 10 participating states. Additional information is available at www.rggi.org.
