Environment DEC
From the October 2009 issue
Groundbreaking Carbon Market Reaches One Year Milestone
More than 140 million tons of CO2 allowances have already been auctioned, mostly to utilities and manufacturers as intendedDEC Commissioner Pete Grannis hailed the success of New York's participation in the most recent sale of carbon dioxide (CO2) pollution allowances, noting that the pioneering cap-and-trade system for greenhouse gases has now reached its one-year milestone. The recent auction on September 9, 2009, was the fifth held by the 10 states participating in the Regional Greenhouse Gas Initiative (RGGI) and generated more than $66.3 million to invest in the clean energy economy. New York's share of the proceeds is approximately $27.4 million.
All 28.4 million allowances for the 2009 vintage sold at a clearing price of $2.19 per allowance in Wednesday's auction. In a parallel offering, the RGGI states auctioned allowances for a three-year compliance period that begins in 2012. The 2.2 million 2012 vintage allowances sold for $1.87 per allowance. New York sold 11,861,849 of the 2009 vintage allowances and 776,385 of the 2012.
"Vintage" refers to the allocation year of an allowance, as well as the first compliance period in which an allowance may be used for compliance. For example, a 2009 vintage allowance may be used for compliance in the current three-year compliance period (2009-2011), or may be used for compliance in any future compliance period. A 2012 vintage allowance may be used for compliance starting in the 2012-2014 compliance period (and going forward).
Bidders of All Kinds
Since September 2008, more than 100 bidders, including electric utilities, manufacturers, financial institutions, environmental groups and individuals, have participated in the RGGI auctions for CO2 allowances. Trading volumes on national, regulated exchanges now match volumes in other established carbon markets, such as the Kyoto Clean Development Mechanism. And every major power plant in the 10-state RGGI region now reports its CO2 emissions to the public on a quarterly basis.
Overall, the 10 RGGI states have now auctioned more than 140 million allowances and raised a total of $432.8 million since the first RGGI auction in September 2008. New York's share is approximately $155.3 million. The proceeds will go to energy efficiency, clean and renewable energy technologies, and strategies to reduce greenhouse gases and create green jobs.
"Once again, the RGGI auction was a success, with demand running much higher than supply and compliance entities (utilities and manufacturers) getting most of the allowances," said DEC Commissioner Pete Grannis, who also serves as Chairman of the RGGI, Inc. board of directors. "In its successful first year, RGGI has established a market for carbon, demonstrated that auctions are an efficient and effective way to allocate CO2 allowances, and enabled the states to return millions of dollars in benefits to consumers through investment in energy savings and clean energy."
Part of Governor's Clean Energy Agenda
New York's participation in RGGI is part of Governor David A. Paterson's aggressive clean energy agenda. New York has developed an operating plan to use RGGI proceeds to fund energy efficiency and renewable energy programs to help families, businesses and local governments reduce their energy bills while investing in the clean energy technologies that will create jobs and lower the state's carbon footprint. Other components include the "45 x 15" energy policy and the Renewable Portfolio Standard, which give incentives to develop large-scale renewable generating sources (such as wind, hydroelectric and biomass) and to improve energy efficiency in residential, commercial and industrial sectors.
About RGGI
The 10 Northeast and Mid-Atlantic states participating in RGGI-Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont-have designed the first market-based, mandatory, cap-and-trade program in the U.S. to reduce greenhouse gas emissions. Power sector CO2 emissions are capped at current levels through 2014. The cap will then be reduced by 2.5 percent each year from 2015 through 2018, for a total reduction of 10 percent.
A CO2 allowance represents a limited authorization to emit one ton of CO2 and is issued by a participating state. Every three years, a fossil-fuel fired power plant must show that its CO2 emissions have not exceeded its CO2 allowances in order to comply with regulations. The first compliance period for fossil fuel-fired electric generators under the 10-state CO2 Budget Trading Programs took effect on January 1, 2009, and extends through December 31, 2011.
About RGGI, Inc.
RGGI, Inc. was created in September 2007 to provide technical and administrative services to the states participating in the Regional Greenhouse Gas Initiative. RGGI, Inc. is a 501(c) 3 nonprofit organization. For more information about both the greenhouse gas initiative and RGGI, Inc. please visit the Regional Greenhouse Gas Initiative website (See Related Links below).
The complete press release has quotes from additional officials about the anniversary of the CO2 auction program.
Related Links
Regional Greenhouse Gas Initiative (leaving DEC's site
