Regional Greenhouse Gas Initiative Raises $106.5 Million in Second Auction
January 07, 2009
The Regional Greenhouse Gas Initiative raised $106.5 million for the participating 10 states in a December auction of carbon dioxide emissions allowances. The funds will be invested in energy efficiency and clean energy technologies.
The Regional Greenhouse Gas Initiative (RGGI) raised $106.5 million in an auction of carbon dioxide (CO2) emissions allowances. The auction, held in mid-December, generated funds that will be invested in energy efficiency and clean energy technologies in 10 Northeast and Mid-Atlantic states.
A post-auction report released January 6 described the auction as "robust", with 69 bidders competing to purchase about 3.5 times the available supply of allowances. The report was published by the independent market monitor, Potomac Economics, which ensured the auction was administered fairly.
The 31,505,898 allowances, each representing 1 ton of carbon, were offered for sale on December 17, 2008, and were all sold at a clearing price of $3.38 per allowance. The proceeds will be distributed to the 10 RGGI states in proportion to the CO2 allowances offered for sale by each state. Participating states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.
In the first auction held September 25, of last year, all 12,565,387 allowances that were offered sold at a clearing price of $3.07 per allowance. That auction raised $38.6 million dollars for six RGGI states. (See see the October 1 news story published by the DOE Office of Energy Efficiency and Renewable Energy.) A third auction is scheduled for March 18, 2009.
Pete Crannis, chair of the RGGI board of directors, said, "Once again the results prove that distributing allowances via auctions in a carbon dioxide cap-and-trade program can be successful."
RGGI is the first mandatory, market-based effort in the United States to reduce greenhouse gas (GHG) emissions. Participating states have agreed to cap and then reduce CO2 emissions from the power sector by 10 percent by 2018. Limiting the emissions allowances enables the states to limit the actual GHG emissions. Participating states sell the emission allowances through auctions and invest proceeds in energy efficiency, renewable energy, and other clean energy technologies. The goal is to spur innovation in the clean energy economy and create green jobs in each of the RGGI states.
For an example of how the RGGI funds were used in Maine, see the October 8 news story published by the DOE Office of Energy Efficiency and Renewable Energy.