The states participating in the Regional Greenhouse Gas Initiative (RGGI) 2017 auctions have released the auction notice and application materials for their 35th quarterly carbon dioxide (CO2) allowance auction, to be held on March 8.
Auction 34 was held by the RGGI states in December. The $3.55 per allowance clearing price in December shows a decline from the $4.54/allowance that was recorded during the 33rd auction, which was held three months earlier. It was also far below the $7.50 clearing price recorded during the 30th auction, which was held in late 2015.
The recent lower carbon prices might be related to the dim prospects of the Environmental Protection Agency (EPA) Clean Power Plan in the incoming Trump administration.
The auction notice for CO2 Allowance Auction 35 provides potential auction participants with the information needed to submit a qualification application and indicate their intent to bid in Auction 35.
Under the schedule announced Jan. 12, there are a number of key dates included:
•Jan. 12: Prospective bidder webinar;
•Jan. 25: Intent to Bid and/or qualification application due by 5 p.m. ET;
•March 1: Financial security due by 5 PM ET;
•March 8: Auction 35 (9 AM – noon PM ET);
•March 10: Auction results posted to www.rggi.org at 10 AM ET.
As indicated in the auction notice for CO2 allowance auction 35, the states will offer for sale 14,371,300 CO2 allowances. The states will use a reserve price of $2.15 in 2017.
There is also a 10 million CO2 allowance cost containment reserve (CCR) available for this auction. This reserve will be accessed if the interim clearing price exceeds the CCR trigger price of $10.00.
The March 8 auction will be the first quarterly auction in 2017. Market participants can obtain CO2 allowances in quarterly CO2 allowance auctions or through various secondary markets.
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 2017 RGGI cap is 84.3 million short tons. The RGGI cap then declines 2.5% each year from 2015-2020. The RGGI states also include interim adjustments to the RGGI cap to account for banked CO2 allowances. The 2017 RGGI adjusted cap is 62.4 million short tons.