Northeast Greenhouse Gas Allowance Auction Raises $106.5 Million
While the outcome of President Obama's plan to create a nationwide cap and trade program remains to be seen, regional programs are beginning to hit their stride.
While the outcome of President Obama's plan to create a nationwide cap and trade program remains to be seen, regional programs are beginning to hit their stride.
The Regional Greenhouse Gas Initiative (RGGI), for example, has announced that it raised $106.5 million during a second auction for allowances Dec. 17.
RGGI (pronounced "Reggie") is the first regional market-based, mandatory cap and trade program for greenhouse gas emissions in the United States. Ten states are participating in the program: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.
RGGI is meant to reduce the region's greenhouse gas emissions in two ways. Under RGGI, utilities need to buy allowances to emit greenhouse gases. Reducing the emissions cap will eventually force utilities to to cut their emissions, primarily through energy efficiency or renewable energy.
As the cap decreases, the rising cost of the allowances is meant to add an increasing carbon price to traditional fossil-energy combustion, improving the cost competitiveness of cleaner alternatives.
December's auction yielded $106.5 million in revenue, according to Potomac Economics, an independent market monitor. Selling at a clearing price of $3.38 per allowance meant the prices improved about 10 percent over the auction in September 2008, despite a souring economy.
Some of the revenue is earmarked for participating states for energy efficiency programs.
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