RGGI Issues Notice for Third Auction

The Regional Greenhouse Gas Initiative (RGGI) recently initiated the bidding process for the first compliance period auction of carbon dioxide (CO2) emission allowances, to be held on March 18.

The first auction for CO2 allowances of 2009 will offer allowances from all 10 states participating in the initiative, including Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. States will offer for sale approximately 31.5 million CO2 allowances from 2009 and 2.2 million CO2 allowances from 2012.

Given the very early stage of the market for RGGI CO2 emission allowances, the participating states have determined that it is appropriate to continue to use a reserve price of $1.86 for all the allowances being offered for sale in Auction 3. Before CO2 Allowance Auction 4, the states will once again consider whether there are enough data available to justify the calculation of a current market reserve price.

The release of the Auction Notice, Qualification Application, and Intent to Bid opens the process that potential bidders must follow to qualify for and participate in the March CO2 allowance auction. The states urge prospective bidders to bid for CO2 allowances by downloading auction documents from http://www.rggi.org/CO2-auctions/information.

All potential bidders must have successfully completed the qualification process to participate in the auction.

The March 18 auction follows the success of the RGGI pre-compliance auctions held last year. In each auction, all allowances offered for sale were sold, demand for allowances exceeded supply, and clearing prices of $3.07 per allowance in September and $3.38 per allowance in December all led the independent market monitor to describe the auctions as "robust."

RGGI, Inc.'s Executive Director Jonathan Schrag said, "The first RGGI auction of the compliance phase of the CO2 Budget Trading Programs will build upon the success of the pre-compliance auctions by offering allowances for both current and future control periods."

The states have committed 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. The auction will generate additional revenues for investment in energy efficiency and renewable energy in the RGGI region and fund programs to combat fuel poverty and support consumers. The first two auctions generated nearly $145 million that the states are now using to provide consumers with tools to lower their monthly energy bills and to create green jobs.