Regional Carbon Market Auction Generates $280 Million

The 60th quarterly carbon auction of the Regional Greenhouse Gas Initiative, or RGGI, the nation’s first market-based emissions regulation program, sold all of the more than 22 million CO2 allowances offered at a clearing price of $12.73, according to results released on June 9. By comparison, allowances cleared at $12.50 in the previous auction held in March. Bids ranged from $2.5 to $25.00 per allowance with submitted bid volumes 1.9 times greater than available allowances.

Meanwhile, Virginia is on the verge of exiting RGGI three years after joining it. The Virginia Air Pollution Control Board’s vote to remove the state from RGGI drew criticism from environmental groups. The Environmental Defense Fund called it a harmful action, pointing out that “of the more than 6,000 comments delivered at the March public hearing, 88% of Virginians said they opposed leaving RGGI.” Appalachian Voices opposed the move saying that Virginia would lose an assured source of flood funding and “ironically” the decision comes on the day of another RGGI auction that would yield millions of dollars for flood resilience.

RGGI’s market-based approach sets an annually declining limit on carbon emissions and allows polluters to buy or sell permits. Other members of RGGI, which intends to limit power sector emissions, are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. RGGI states are currently weighing comments on the third review of the program to examine design elements such as emissions cap trajectory, environmental justice, and equity considerations.

With a slight increase from the last auction, the clearing price was not high enough to release allowances from the program’s cost containment reserve, which has just over 11.25 million short tons. This year’s trigger price is $14.88 per ton. The previous auction had the same trigger price and a lower clearing price so no allowances from the reserve were released.

The auction raised about $280 million in funding for states to reinvest in energy efficiency, clean energy, and greenhouse gas mitigation programs. Over the program’s history, auctions have raised more than 6.4 billion. At the end of the auction, CO2 allowances were awarded to 51 of the 74 bidders. Compliance-oriented entities purchased 50 percent of the allowances offered, down from 63 percent at the March auction. Sixty percent of all allowances in circulation are held for compliance purposes, according to RGGI’s market monitor report.