In its first auction since the Environmental Protection Agency (EPA) issued its Clean Power Plan, the Regional Greenhouse Gas Initiative (RGGI) saw carbon dioxide allowance prices surpass the $6 mark.
The nine Northeastern and Mid-Atlantic states participating in RGGI, the nation’s first market-based regulatory program to reduce greenhouse gas (GHG) pollution, announced the results of their 29th auction of CO2 allowances on Sept. 11.
RGGI reported 25,374,294 CO2 allowances were sold at a clearing price of $6.02. This includes the initial offering of 15,374,294 CO2 allowances and 10 million additional Cost Containment Reserve (CCR) allowances.
The CCR is a fixed supply of 10 million allowances that are only available for sale if CO2 allowance prices exceed certain price levels ($6 in 2015, $8 in 2016, $10 in 2017, and rising by 2.5% each year thereafter to account for inflation). There are no more CCR allowances available for sale in 2015. The CCR will be replenished in calendar year 2016.
Bids for the CO2 allowances ranged from $2.05 to $10.00 per allowance.
Auction 29 marks the seventh anniversary since RGGI’s first auction in 2008. Cumulative proceeds from all RGGI CO2 allowance auctions exceed $2.2bn for reinvestment in strategic programs, including energy efficiency, renewable energy, direct bill assistance, and GHG abatement programs. The Sept. 9 auction was the third auction of 2015 and generated over $152m.
The prior auction three months earlier saw 15.5 million CO2 allowances sold at a clearing price of $5.50.
This auction comes directly on the heels of several independent reports which have reinforced RGGI’s benefits to consumers, the economy, and our environment,” said Katie Dykes, Deputy Commissioner for Energy of the Connecticut Department of Energy and Environmental Protection, and Chair of the RGGI, Inc. Board of Directors.
“States across the country are preparing for the implementation of EPA’s Clean Power Plan. With a seven year track record the RGGI states have demonstrated that reducing pollution is fully compatible with economic growth and providing reliable power,” Dykes said.
The EPA program calls upon states to draft plans to cut power sector CO2 emissions 32% by 2030.
The Northeast and Mid-Atlantic states participating in the third RGGI control period include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.
In Auction 29, compliance entities and their affiliates purchased 74% of the allowances sold, according to Potomac Economics, which is the market monitor for RGGI. In the first 29 RGGI auctions, all compliance entities and their affiliates purchased 77% of the allowances sold. Bids were submitted by 37 compliance-oriented entities and 14 other entities.