Tuesday, January 21, 2014

CO2 Allowances Sold at $3.00 at 22nd RGGI Auction, RGGI States Make Major Cuts to Greenhouse Gas Emissions from Power Plants

Having completed revisions to their state CO2 Budget Trading Programs, the nine states participating in the Regional Greenhouse Gas Initiative (RGGI) announced that the 2014 RGGI cap is 91 million tons. This represents a 45 percent reduction to the RGGI CO2 cap. To further build on this progress, the RGGI cap will decline 2.5 percent each year from 2015 to 2020. By 2020, power plant CO2 pollution in the nine RGGI states is projected to be half of 2005 levels.

The first CO2 allowance auction under the new cap, and the twenty-third RGGI auction overall, will take place on March 5, 2014. The RGGI states released the Auction Notice for CO2 Allowance Auction 23 today.

Having strengthened their successful carbon pollution reduction program, the RGGI states have submitted extensive comments to the United States Environmental Protection Agency (EPA) describing why regional cap-and-trade programs, like RGGI, offer a simple, cost-effective way for states to comply with upcoming EPA regulations to cut CO2 pollution from existing power plants....
The nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative, the nation’s first market-based cap-and-trade program to reduce greenhouse gas pollution, on December 6, 2013 the results of their 22nd auction of carbon dioxide (CO2) allowances.

38,329,378 CO2 allowances were sold at the auction at a clearing price of $3.00. Allowances sold represent 100 percent of the allowances offered for sale by the nine states. Bids for the CO2 allowances ranged from $1.98 to $12.00 per allowance.

The auction generated $114.9 million for reinvestment by the RGGI states in a variety of consumer benefit initiatives, including energy efficiency, renewable energy, direct bill assistance, and greenhouse gas abatement programs. Cumulative proceeds from all RGGI CO2 allowance auctions currently total $1.5 billion dollars.

According to the independent market monitor’s report, electricity generators and their corporate affiliates have won 81 percent of CO2 allowances sold in RGGI auctions since 2008. Additional details are available in the Market Monitor Report for Auction 22, appended and available at http://www.rggi.org/docs/Auctions/22/Auction_22_Market_Monitor_Report.pdf.

“After twenty-two auctions, RGGI has demonstrated that regional carbon pollution programs can cost-effectively reduce emissions while strengthening the economy,” said Collin O'Mara, Secretary of the Delaware Department of Natural Resources and Environmental Control and Chair of the RGGI, Inc. Board of Directors. “By harnessing market forces and aligning state policies, RGGI has helped states significantly lower emissions while building a clean energy infrastructure.”

“The RGGI states demonstrated they were early movers in 2008, when they were the first region in North America to conduct a CO2 allowance auction,” said David Littell, a Commissioner of the Maine Public Utilities Commission and Vice-Chair of the RGGI, Inc. Board of Directors.

“Having now held twenty-two CO2 auctions in five and a half years, RGGI has demonstrated a market-based system that finds the lowest-cost CO2 reductions.”

More data is also available at: http://www.rggi.org/market/co2_auctions/results.

RGGI Program Review

The RGGI states released an Updated Model Rule and Program Review Recommendations Summary on February 7, 2013. The Updated Model Rule will guide the RGGI states as they follow state-specific processes to propose updates to their CO2 Budget Trading Programs. The RGGI states anticipate that they will complete their state-specific processes such that the proposed changes would take effect in January 2014.
The changes outlined in the Updated Model Rule and Program Review Recommendations Summary build upon RGGI’s success and strengthen the program moving forward.  Improvements include:
• A reduction of the 2014 regional CO2 budget, “RGGI cap”, from 165 million to 91 million tons – a reduction of 45 percent. The cap would decline 2.5 percent each year from 2015 to 2020.
• Additional downward adjustments to the RGGI cap from 2014-2020. This will account for the private bank of allowances held by market participants before the new cap is implemented in 2014.
• Cost containment reserve (CCR) of allowances that creates a fixed additional supply of allowances that are only available for sale if CO2 allowance prices exceed certain price levels ($4 in 2014, $6 in 2015, $8 in 2016, and $10 in 2017, rising by 2.5 percent, to account for inflation, each year thereafter).
• Updates to theRGGI offsets program, including a new forestry protocol.
• Not reoffering unsold 2012 and 2013 CO2 allowances.
• Requiring regulated entities to acquire and hold allowances equal to at least 50 percent of their emissions in each of the first 2 years of the 3 year compliance period, in addition to demonstrating full compliance at the end of each 3 year compliance period.
• Commitment to identifying and evaluating potential tracking tools for emissions associated with electricity imported into the RGGI region, leading to a workable, practicable, and legal mechanism to address such emissions.

More information, including the Updated Model Rule and accompanying materials are available


Regional Greenhouse Gas Initiative (RGGI) Inc. www.RGGI.org 
Press Releases dated December 6, 2013 and January 13, 2014

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