The nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI) said Sept. 9 that $67.7m was raised in the organization’s third carbon dioxide (CO2) allowance auction of 2016.
RGGI, the nation’s first market-based regulatory program to reduce greenhouse gas (GHG) pollution, said that the 33rd auction of CO2 allowances was held Sept. 7 and resulted in a clearing price of $4.54. 14,911,315 CO2 allowances were sold at the auction at the clearing price.
Bids for the CO2 allowances ranged from $2.10 to $12.65 per allowance. Additional details are available in the Market Monitor Report for Auction 33.
Potomac Economics acts as the market monitor for RGGI.
The Sept. 7 auction was the third auction of 2016, and generated $67.7m for reinvestment in strategic programs, including energy efficiency, renewable energy, direct bill assistance, and GHG abatement programs. Cumulative proceeds from all RGGI CO2 allowance auctions exceed $2.58bn.
Forty-one bidders participated in the offering of CO2 allowances. Bids were submitted to purchase 2.8 times the available supply of allowances. Compliance-Oriented Entities purchased 42% of the allowances in the offering. There was no indication of barriers to participation in the auction, according to Potomac Economics.
There were 10 million cost containment reserve (CCR) allowances also available for sale. None of the CCR allowances were sold. The CCR is a fixed additional supply of allowances that are only available for sale if CO2 allowance prices exceed certain price levels ($8 in 2016, $10 in 2017, and rising by 2.5% each year thereafter to account for inflation).
RGGI program elements, including the CCR cap and trigger price, are potentially subject to amendment as part of the 2016 program review.
“This auction demonstrates RGGI’s benefits to each participating state, helping to reduce harmful emissions while generating proceeds for reinvestment. Each RGGI state directs investments according to its individual goals, and this flexibility has been key to the program’s success across a diverse region.” said Katie Dykes, Deputy Commissioner at the Connecticut Department of Energy and Environmental Protection and Chair of the RGGI, Inc. Board of Directors.
The Northeast and Mid-Atlantic states participating in the third 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 United States to reduce greenhouse gas emissions.
The 2016 RGGI cap is 86.5 million short tons. The RGGI cap declines 2.5% each year until 2020. The RGGI states also include interim adjustments to the RGGI cap to account for banked CO2 allowances. The 2016 RGGI adjusted cap is 64.6 million short tons.