The latest Regional Greenhouse Gas Initiative (RGGI) auction fetched a price of $5.21 for carbon dioxide (CO2) allowances, RGGI said Dec. 5 and that reflects a higher price than the one recorded during the auction in September.
The Dec. 3 auction was the 26th auction of CO2 allowances by RGGI. The CO2 allowance price during the 25th auction, which occurred in September, was only $4.88.
18,198,685 CO2 allowances were sold at the auction at a clearing price of $5.21. Allowances sold represent 100% of the allowances offered for sale by the nine Northeast and Mid-Atlantic states that comprise RGGI.
The auction generated more than $94m for reinvestment by the RGGI states in a variety of consumer benefit initiatives, including energy efficiency, renewable energy, direct bill assistance, and greenhouse gas abatement programs, RGGI said. Cumulative proceeds from all RGGI CO2 allowance auctions currently total $1.9bn dollars.
The bid quantities during the Dec. 3 auction were widely distributed among the 50 bidders.
According to the independent market monitor, Potomac Economics, report, electricity generators and their corporate affiliates have won 78% of CO2 allowances sold in RGGI auctions since 2008.
RGGI has been hailed as something of a template for regional compliance with the Environmental Protection Agency (EPA) Clean Power Plan, the proposal that would require states to curb power sector CO2 by 30% by 2030.
RGGI requires a regulated power plant to hold CO2 allowances equal to its emissions to demonstrate compliance for each three-year control period. RGGI’s second control period began on January 1, 2012 and ends on December 31, 2014. Regulated power plants will be required to demonstrate compliance for the second control period on March 2, 2015.
“Our RGGI experience demonstrates that cost-effective approaches to implementing EPA’s proposed Clean Power Plan are available and if correctly designed can support state economies,” said Rob Klee, Commissioner of the Connecticut Department of Energy and Environmental Protection and a Vice-Chair of the RGGI, Inc. Board of Directors.
The Northeast and Mid-Atlantic states participating in the second RGGI control period (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont) have implemented the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. The 2014 RGGI cap is 91 million short tons. The RGGI cap then declines 2.5% each year from 2015-2020.