RGGI Auction Prices Rebound in Response to Proposed Changes
BOSTON — Prices increased in the first Regional Greenhouse Gas Initiative (RGGI) auction since the participating states proposed a set of changes to the program. This is an initial indication that the market expects the program to be stronger in the future. All 14,371,585 available allowances were sold at a clearing price of $4.35, generating $62,516,395 in revenue for reinvestment. This brings the program’s total revenue to $2.78 billion—most of which has been used to fund energy efficiency and other consumer benefit programs. The Auction 37 clearing price is 72% higher than the previous auction and 4% lower than the clearing price from one year ago. This marks an end to the steady decline in auction clearing prices that began in early 2016.
The key changes announced by the states include:
- Reducing the emissions cap by 30% from 2020 to 2030;
- Conducting a full adjustment for banked allowances;
- Strengthening the existing Cost Containment Reserve; and
- Establishing an Emissions Containment Reserve
“We applaud the RGGI states for working together to improve the program, and the Auction 37 results show that these changes should make RGGI stronger,” said Acadia Center President Daniel Sosland. “After nearly two years of negotiations, the states have put RGGI on a course for long-term success.”
“Proposed policy changes have driven prices upward in this auction, but implementing RGGI reforms is the only way to ensure that prices won’t dive again,” said Jordan Stutt, Policy Analyst with Acadia Center. “Emissions continue to fall rapidly—each of the first two quarters in 2017 resulted in record low quarterly emissions—and even the new cap may not decline quickly enough to keep up with decarbonization in the electric sector. Fortunately, the new addition of an Emissions Containment Reserve should help the states reduce emissions further, at low costs to consumers.”
“The increase in allowance prices is a testament to the leadership of the RGGI states,” said Peter Shattuck, Director of Acadia Center’s Clean Energy Initiative. “By following through on proposed reforms, the nine RGGI states can demonstrate the power of bipartisan action to address climate change.”
Information on RGGI’s performance to date can be found in Acadia Center’s latest RGGI Status Report:
Additional information on the benefits of RGGI can be found at https://www.cleanenergyeconomy.us/
RGGI Overview:
The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions. Nine northeastern and mid-Atlantic states reduce CO2 emissions by setting an overall limit on emissions “allowances,” which permit power plants to dispose of CO2 in the atmosphere. States sell allowances through auctions and invest proceeds in consumer benefit programs: energy efficiency, renewable energy, and other programs.
The official RGGI web site is: www.rggi.org
Media Contacts:
Jordan Stutt, Policy Analyst, Clean Energy Initiative
jstutt@acadiacenter.org, 617-742-0054 x105
Peter Shattuck, Director, Clean Energy Initiative
pshattuck@acadiacenter.org, 617-742-0054 x103