RGGI CO2 Allowance Auction Price Sinks to Lowest Level

by | Sep 10, 2010

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The Regional Greenhouse Gas Initiative (RGGI) has announced the results (PDF) of its ninth auction of carbon dioxide allowances since it’s launch in 2008. The auction, held Wednesday, September 8, hit its lowest allowed level for allowance prices for the two-year old program, selling at $1.86 a ton, which indicates an over-supplied market primarily due to lower power demand, reports The Wall Street Journal.

The auction yielded $63,997,020 from the sale of 34,407,000 allowances. RGGI says more than 75 percent of allowances were sold.

The auction clearing price was $1.86 per allowance, which is slightly lower than the June 9 auction price of $1.88. Forty-five entities submitted winning bids, ranging from $1.86 to $3.00. Electric generators and their corporate affiliates purchased 92 percent of the total number of current control period allowances sold.

States also offered a smaller number of CO2 allowances for a future control period of 2012-2014. These yielded a total of $2,440,320 from the sale of 1,312,000 allowances. Over 61 percent of future control period allowances offered for sale were sold.

Six bidders submitted winning bids, with bids ranging from $1.86 to $1.92. Electric generators and their corporate affiliates purchased 100 percent of the allowances sold.

According to the Market Monitor Report for Auction 9, electric generators and their corporate affiliates have won 84 percent of all CO2 allowances sold in Auctions 1-9 and will hold 95 percent of CO2 allowances in circulation following the settlement of allowances sold in Auction 9.

RGGI limits power plants’ CO2 emissions from ten participating states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.

Since September 2008, proceeds from RGGI auctions have totaled $729,281,959, with more than 80 percent being invested in energy programs. Overall, RGGI participating states are investing 60 percent of proceeds from RGGI CO2 allowance auctions to improve energy efficiency, 10 percent to accelerate the deployment of renewable energy technologies, and an additional 10 percent to provide direct consumer benefits, including energy bill payment assistance to low-income ratepayers.

These investments generate significant energy and cost savings for these states. As one example, Maryland estimates that it will save more than $125 million this year and create 630 new green collar jobs.

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