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States Release Results of Third Auction for RGGI CO2 AllowancesMarch 20, 2009 CONTACT: (AUGUSTA) – The states participating in the Regional Greenhouse Gas Initiative (RGGI) today announced the results of the third auction for RGGI carbon dioxide (CO2) allowances. The March 18th auction was the first since compliance obligations under RGGI's first three-year control period began January 1, 2009. RGGI was entered into in 2005 by Maine Governor John Baldacci and implemented through legislation enacted in 2007-2008. All of the 31,513,765 allowances for the 2009 vintage sold at a clearing price of $3.51 per allowance. In a parallel offering, the RGGI states also auctioned allowances for the second three-year control period beginning in 2012, providing a first-look at future market prices for RGGI CO2 allowances. The 2,175,513 allowances for the 2012 vintage cleared at a price of $3.05 per allowance. By the end of 2009, the RGGI states will have offered for sale 5% of the total supply of 2012 vintage allowances. The auction raised $117,248,629.80 for energy efficiency, renewable energy and other consumer benefit programs in the ten RGGI states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont). “Maine is very pleased to be part of the Regional Greenhouse Gas Initiative that went live on January 1, 2009,” said Maine Department of Environmental Protection (DEP) Commissioner David Littell. “The success of our third auction shows that sophisticated market players recognize that a cap and trade system for greenhouse gas is working. While we see many arguments that it cannot work in the United States, these ten states have implemented a cap and trade system that is working well.” Potomac Economics, RGGI, Inc.’s independent market monitor, observed the auction and confirmed that it was fair and consistent with noticed auction procedures. In its "Auction Report,” Potomac found that there was “no material evidence of collusion or manipulation by bidders" and that the results were "consistent with competitive expectations." 50 separate entities submitted bids to purchase 2.5 times the available supply of 2009 allowances, and 20 entities submitted bids to purchase 2.3 times the available supply of 2012 allowances. A total of 42 entities won allowances for the 2009 offering, in which bid prices ranged from $1.86 (the minimum bid allowed) to $10.00. 12 bidders won allowances for the 2012 offering, in which bid prices ranged from $1.86 to $4.40. The Auction Report, issued by the market monitor following each RGGI auction, includes data on the dispersion of bids, provides summaries of purchased allowances, allowances won by bidders and bid prices, and, in accord with the Auction Notice for Auction 3, a list of Potential Bidders for Auction 3. Potential bidders are defined as “each Applicant that has been qualified and submitted a complete Intent to Bid.” The list of 63 potential bidders demonstrates broad participation from compliance entities, financial institutions and environmental organizations. According to Potomac, compliance entities and their affiliates won over 78 percent of the 2009 allowances and 93 percent of 2012 allowances. The high percentage of allowances won by compliance entities at auction continues a trend established in the two "pre-compliance" auctions held in September and December 2008 in which compliance entities won 80 percent and 85 percent of allowances, respectively. "Maine and our nine other state partners working with World Energy Solutions and our market monitor have approved the results of this third auction,” said DEP’s Air Bureau Director James Brooks. “After reviewing the recommendations of the market monitor it indicates a fair and well functioning multi-state auction system." Compliance obligations for fossil fuel-fired electric generators under the 10-state CO2 Budget Trading Programs took effect on January 1, 2009. RGGI's participating states held two "pre-compliance" auctions in September and December 2008, at which the clearing prices were $3.07 and $3.38, respectively. The RGGI participating states will hold quarterly auctions ensuring bidders ample opportunity to obtain the CO2 allowances they need for compliance across the entire 10-state region. The next auction is scheduled for June 17, 2009. According to Commissioner Littell, “Proceeds from the auction will now be used for energy conservation and efficiency projects that reduce our dependency on fossil fuel.” About the Regional Greenhouse Gas Initiative 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. The participating states have regulations in place to cap and then reduce the amount of CO2 that power plants in their region are allowed to emit, limiting the region’s total contribution to atmospheric greenhouse gas levels. Power sector CO2 emissions are capped at current levels through 2014. The cap will then be reduced by 2.5 percent in each of the four years 2015 through 2018, for a total reduction of 10 percent. A CO2 allowance represents a permit to emit one ton of CO2, as issued by a respective participating state. A regulated power plant must hold CO2 allowances equal to its emissions to demonstrate compliance at the end of each compliance period. Because CO2 allowances issued by any participating state will be usable across all state programs, the ten individual state CO2 Budget Trading Programs, in aggregate, will form one regional compliance market for CO2 emissions. The RGGI auction was run on an on-line platform provided by World Energy Solutions, Inc (TSX: XWE), which operates online exchanges for energy and green commodities. RGGI allowance transactions are recorded on the Carbon Dioxide Allowance Tracking System (COATS) developed by Perrin Quarles Associates, which designs and builds emissions database tracking systems. All RGGI auctions are overseen by RGGI, Inc.’s independent market monitor, Potomac Economics, a leader in the field of monitoring and competitive assessment of wholesale electricity markets in the U.S. For more information about RGGI, turn to: http://www.rggi.org About Regional Greenhouse Gas Initiative, 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 please visit: http://www.rggi.org/rggi # |
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