The first RGGI carbon credit auction under the new 2014 cap sold allowances at $4 each, the highest since RGGI began its cap-and-trade program in 2008.
On March 7, 2014, Regional Greenhouse Gas Initiative (RGGI) member states announced results of their 23rd carbon credit auction held on March 5. The auction was the first to be held under the new 2014 carbon cap of 91 million tons, approximately 45 percent lower than the previous cap of 165 million tons. The cap will decline at 2.5 percent per year from 2015-2020 to reduce power plant emissions by 50 percent relative to 2005 levels.
The 23rd auction offered 23,491,350 allowances at a reserve price of $2.00, including 5,000,000 Cost Containment Reserve (CCR) allowances allocated for 2014. CCR is a fixed supply of additional allowances available for sale if the clearing price exceeds specified price levels – $4 in 2014, $6 in 2015, $8 in 2016, and $10 in 2017, increasing at an annual rate of 2.5 percent thereafter to account for inflation. Bids ranged from $2.00 to $11.85 per allowance. The auction sold all allowances – including 2014 CCR allowances – at a clearing price of $4.00, generating approximately $93.96M. By comparison, the 22nd auction sold 38,329,378 allowances – approximately 63 percent more than the 23rd auction – generating approximately $114.98M. Auction proceeds will be invested in consumer benefit initiatives, including energy efficiency, renewable energy, direct bill assistance, and greenhouse gas abatement programs. Cumulative proceeds from the 23 RGGI auctions currently total to more than $1.6B.
23rd RGGI Auction Results
| Allowances offered | 18,491,350 |
| 2014 CCR allowances available | 5,000,000 |
| Allowances sold | 23,491,350 |
| Reserve Price | $2.00 |
| Clearing Price | $4.00 |
| Ratio of bids to initial supply | 3.1 |
| Ratio of bids to total supply with CCR | 2.5 |
| Auction revenue | $93,965,400 |
Source: RGGI
RGGI’s independent market monitor report shows that compliance entities and their affiliates purchased 45 percent of allowances in the 23rd auction and have won 78 percent of allowances since 2008.
March 10, 2014 via Energy Solutions Forum.
Energy Solutions Forum is an energy policy research and data company based in New York City. Follow @EnergySolForum for policy research and stay plugged in with ESF Calendar, the industry’s go-to resource for energy business events in and around NYC.
