NEW YORK - The Regional Greenhouse Gas Initiative (RGGI) has successfully conducted the first-in-the-nation auction of carbon dioxide (CO2) emission allowances. More than $38.5 million was raised from the sale of 12.5 million allowances to bidders from the energy, financial, and environmental sectors. The allowances were sold at a clearing price of $3.07, with demand exceeding the offerings by more than four times the available amount.
Six of the 10 RGGI states offered allowances for sale in the first auction. Connecticut, Maine, Maryland, Massachusetts, Rhode Island, and Vermont will invest the proceeds from the auction in energy efficiency and renewable energy technologies and other programs to benefit energy consumers. The allowances can be used for compliance in any of the 10 states participating in RGGI, including the four states - Delaware, New Hampshire, New Jersey, and New York - that did not offer allowances in this first auction.
RGGI aims to reduce carbon dioxide emissions through a cap-and-trade program. Under the initiative, the 10 participating states will stabilize carbon dioxide emissions from the power sector at capped levels. The states will then reduce the cap 10 percent by 2018, with 2.5 percent decreases each year between 2015 and 2018. Auctioning the allowances allows the states to invest the revenues in programs that reduce energy demand and the use of fossil fuels. The next auction will be held in December of this year, and all 10 states are expected to offer allowances for sale in the first 2009 auction and in quarterly auctions thereafter.
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