NEW YORK – The Regional Greenhouse Gas Initiative’s third auction of carbon-dioxide (CO2) emissions credits raised nearly $117.25 million for energy efficiency, renewable energy and other programs in the 10 participating states, nonprofit authority RGGI Inc. reported today.
The auction Wednesday was the first since the RGGI states’ cap-and-trade rules for fossil-fuel-fired electric generators took effect Jan. 1. It also was the first look at futures prices for the RGGI carbon credits, the auction manager noted.
Besides “2009 vintage” carbon dioxide allowances for the program’s first three-year period, it included the allied states’ first offering of “2012 vintage” allowances for the program’s second three-year period. By year’s end, the regional alliance plans to offer 5 percent of the total supply of carbon credits for the 2012 period.
“All of the 31,513,765 allowances for the 2009 vintage sold at a clearing price of $3.51 per allowance,” RGGI said. The auction drew bids from 50 separate entities seeking to purchase 2.5 times the available supply of regional carbon credits.
Meanwhile, “the 2,175,513 allowances for the 2012 vintage cleared at a price of $3.05 per allowance.” The auction drew bids from 20 entities seeking to purchase 2.3 times as many credits as were offered.
Each RGGI allowance represents a permit to emit 1 ton of CO2 in any participating state. At the end of each compliance period, every regulated power plant must hold current CO2 allowances equal to its emissions throughout that three-year span.
So-called “compliance entities” – organizations that produce electric power by burning fossil fuels within the 10-state RGGI region – and their affiliates (rather than other investors) purchased 78 percent of the 2009 allowances and 75 percent of the 2012 allowances, according to RGGI market monitor Potomac Economics. That continues a trend established in the September and December auctions, when compliance entities won 80 percent and 85 percent of CO2 allowances, respectively.
“The states are very pleased with the results,” said Pete Grannis, chairman of the board of directors of the RGGI authority.
“Our continued success provides further support for President [Barack] Obama’s position that a national cap-and-trade program, with allowance auctions, is the right policy for the country and the right approach for addressing the most pressing environmental and economic issue of our time: climate change.”
Each state participating in the RGGI – besides Rhode Island, the alliance includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York and Vermont – has agreed to cap total power-plant emissions at current levels through 2014. Their caps then will be lowered by 2.5 percent of that amount in each of the next four years, for a total reduction of 10 percent by 2018.
Because credits sold by any participating state may be used by power plants anywhere in the 10-state region, the “individual state CO2 Budget trading programs, in aggregate, will form one regional compliance market,” the RGGI said.
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 Regional Greenhouse Gas Initiative Inc. (RGGI Inc.), a nonprofit corporation created by the 10 participating states. Additional information is available at www.rggi.org.
