The carbon dioxide (CO2) allowance clearing price fell to $3.55 during the 34th auction held by nine Northeast and Mid-Atlantic states that comprise the Regional Greenhouse Gas Initiative (RGGI).
RGGI, the nation’s first market-based regulatory program to reduce GHG pollution, held its 34th auction on Dec. 7. RGGI and its market monitor Potomac Economics reported results of the auction on Dec. 9.
The clearing price shows a decline from the $4.54/allowance that was recorded during the 33rd auction, which was held three months earlier. It’s also far below the $7.50 clearing price recorded during the 30th auction, which was held a year ago, while there was much speculation about the impact of the Environmental Protection Agency (EPA) Clean Power Plan.
The most recent auction is also RGGI’s first since the November election of Republican Donald Trump. Trump is often described as a global warming skeptic and his incoming administration is not expected to defend the Clean Power Plan in court.
Indeed Trump’s preference to head EPA is Oklahoma Attorney General Scott Pruitt, who has been in the forefront of a multi-state legal challenge to the carbon reduction plan. Oral arguments on the Clean Power Plan were heard by the full D.C. Circuit Court of Appeals earlier this fall.
More than 14.7 million allowances sold at recent auction
RGGI reported that 14,791,315 CO2 allowances were sold at the auction at a clearing price of $3.55. Bids for the CO2 allowances ranged from $2.10 to $13.75 per allowance.
The December 7th auction was the fourth and final auction of 2016, and generated $52.5m 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 $2.6bn.
Ten million cost containment reserve (CCR) allowances were also available for sale. No 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).
“Our experience with RGGI shows that there is no need to choose between pollution reductions and economic growth – we can enjoy both at the same time because they are mutually supportive,” said Tom Burack, Commissioner of the New Hampshire Department of Environmental Services, and Secretary of the RGGI, Inc. Board of Directors.