Feb. 2, 2009: Northeast Greenhouse Gas Allowance Auction Raises $106.5 Million
February 2, 2009
NEW YORK - The second auction of allowances for greenhouse gas emissions held by the Regional Greenhouse Gas Initiative (RGGI) yielded $106.5 million for use by the 10 RGGI states, according to Potomac Economics, an independent market monitor. While some feared that the economic situation would depress the prices for the emission allowances, in reality the prices went up, selling at a clearing price of $3.38 per allowance. That's about 10 percent higher than the clearing price of $3.07 per allowance that was reached in the first auction, which was held in late September 2008. RGGI is the first market-based, mandatory cap-and-trade program for greenhouse gas emissions in the United States. Ten northeastern and mid-Atlantic states are participating in the program, including Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.
RGGI helps reduce the region’s greenhouse gas emissions in two ways: first, the steady reduction of the emissions cap will eventually force electric generators to find ways to cut their emissions, primarily through energy efficiency or renewable energy. As the cap decreases, the rising cost of the allowances will effectively add an increasing carbon price to traditional fossil-energy combustion, improving the cost competitiveness of cleaner alternatives. But the auction also yields a new source of revenue for the participating states. Massachusetts, for instance, gained $14.8 million from the latest auction, the bulk of which was directed toward utility energy efficiency programs, heating system upgrades for the homes of families earning low incomes, and a new “green communities” effort. The funds are also supporting a new $5 million training program for insulation installers, energy auditors, and other energy efficiency technicians, creating skilled labor needed for the green-collar job opportunities that are generated by the effort to reduce greenhouse gas emissions.
Publication date: 02/02/2009