All 12.6 million allowances offered at the first U.S. carbon dioxide emissions auction sold on Sept. 25, 2008. The permits were bought by 59 participants from energy, financial, and environmental sectors at a clearing price of $3.07 per allowance, states participating in the Regional Greenhouse Gas Initiative (RGGI) said Monday.
RGGI said on its web site that a total of 51,761,000 allowances were demanded—four times the available supply for the first auction.
The 12,565,387 allowances that had been offered all sold, generating $38,575,783. The auction’s proceeds will be distributed to Connecticut, Maine, Maryland, Massachusetts, Rhode Island, and Vermont, the six RGGI states that offered allowances for sale during the first auction. The states are investing those funds in energy efficiency and renewable energy technologies, RGGI said.
RGGI aims to cap carbon emissions from power plants at current levels for several years and then reduce them 10% by 2018 (PDF). Ten participating states have agreed to regulate, via adopted state legislation, the carbon dioxide emissions from fossil fuel–fired power plants with a capacity equal to or greater than 25 MW.
RGGI will allot allowances to these states based on a regional emissions budget. Each state will then sell allowances to power generators through regional auctions—instead of directly allocating them, as with traditional “cap-and-trade” programs. Any carbon dioxide allowance purchased at the first state auction can be used by a regulated facility for compliance in any of the RGGI states—even if that state did not offer allowances in the first auction.
Four states—Delaware, New Hampshire, New Jersey, and New York—were unable to finalize regulations in time to contribute allowances to the first auction on Sept. 25. The next auction will be held on Dec. 17.
RGGI intends to hold quarterly auctions during its first three-year compliance period, from January 1, 2009 to December 31, 2011.
Last week, the Western Climate Initiative (WCI) released design recommendations for its cap-and-trade program to cut greenhouse gas emissions from power plants, manufacturers, and vehicles in participating states and provinces.
The WCI (whose members’ geographic area includes a large chunk of eastern Canada) covers more polluters than other regional plans in the U.S., Canada, and Europe.
Seven Western U.S. states—Arizona, California, Montana, New Mexico, Oregon, Utah, and Washington—and four Canadian provinces—British Columbia, Manitoba, Ontario, and Quebec—drafted the plan.
The WCI aims to cut 15% of the region’s carbon emissions below 2005 levels by 2020. Each participating state and province must create its own trading scheme that complies with the regional guidelines.
But according to the Associated Press, it is unclear whether lawmakers in each state and province will adopt the WCI’s regulations. Utah, for example, fears that the aggressive approach would hurt businesses and make the state uncompetitive in a global economy.
Sources: RGGI, WCI, AP