» Carbon prices keep falling in RGGI auctions :: Granite Geek

Dec042009

Carbon prices keep falling in RGGI auctions

Filed under Greenhouse gas by david brooks at 11:54 am

The latest quarterly auction of carbon dioxide allowances held by the Regional Greenhouse Gas Initiative (RGGI) saw prices continuing to fall as a recession-driven lack of electricity demand reduces the need for them. Further, not all the allowances for the future sold, perhaps indicating uncertainty about what a federal cap-and-trade program (should one ever arise) will due to RGGI allowances.

All 28.6 million allowances (which are needed by electrical generators to offset CO2 pollution from their power stations) for the 2009 vintage offered in Wednesday’s auction sold at $2.05, the lowest price ever. (The sale price was $2.19 per ton in September, $3.05 in the summer and $3.51 back in the first real auction in March.)

However, 2.17 million allowances for the second three-year control period (beginning January 1, 2012) were put up for auction, but just 1.6 million were sold - at a price of $1.86, which is barely above the $1.80 minimum. It doesn’t bode well for cap-and-trade’s ability to control pollution if the potential polluters don’t think they need to stock up on allowances.

A CO2 allowance gives regulated power plants authorization to emit one ton of CO2. By 2012, power plunts must hold enough allowances equal to its emissions.

The money collected from the auctions - $494 million total so far for the 10 states - is mostly being spent on ways to reduce energy usage (although New York state has raided their RGGI funds to help balance the budget).

Additional details about RGGI Auction 6 may be found in the Market Monitor Report for Auction 6, available at: http://www.rggi.org/docs/Auction_6_Results_Release_MMrep.pdf

Tags: RGGI