Ben Butterworth, Director: Climate, Energy, and Equity Analysis
email@example.com, 617-742-0054 x111
Paola Moncada Tamayo, Policy Analyst
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BOSTON, MA- On Wednesday, December 7th, the eleven states participating in the Regional Greenhouse Gas Initiative (RGGI) released the results of the 58th and final auction for 2022. Emissions allowances were sold for $12.99 each, generating $288 million for clean energy investments in participating states. The allowance price for the RGGI program is the lowest in 2022 but remains well above the historical average. The Cost Containment Reserve (“CCR”) Trigger Price of $13.91 per ton of CO2 was avoided, so no CCR allowances were sold in the auction. Both the proceeds from sales of allowances and the clearing price for this 58th auction ranked among the top five highest in the history of RGGI.
Higher RGGI allowance price is good for climate, clean energy investment
The clearing price represents the price that power plant operators must pay for each ton of CO2 emitted by their fossil-fuel-fired plants. The auction clearing price of $12.99 represents a modest 3% decrease from the previous auction in August, but, in total, the average 2022 auction price was 42% higher than the average 2021 auction price. The higher allowance prices seen in 2022 mean the RGGI program is sending a stronger incentive to produce electricity from carbon-free sources, like wind and solar. Recent auctions have demonstrated the growing significance of the CCR – the auctions in 2022 have all narrowly avoided the CCR trigger price, while the 54th auction in December 2021 represented the first time since 2015 that additional allowances were released because of triggering the CCR.
Since the program launched, the vast majority of RGGI proceeds have been invested in energy efficiency and clean energy projects as detailed in the most recent report on RGGI investments in 2020, released in May of this year. The $288 million in proceeds generated in this auction brings the annual to-date total to $1.19 billion, which is 29% higher than the total proceeds of 2021’s record-setting total proceeds. Auction proceeds have increased dramatically in recent years.
For example, the auction proceeds of 2022 so far are 128% higher than the total proceeds generated in all 2018 and 2019 auctions combined. This is great news for climate action, the economy, and the growing workforce in energy efficiency and clean energy.
RGGI Third Program Review Offers an Opportunity to Direct Proceeds Towards Clean Energy Investments that Directly Benefit Environmental Justice Communities
Since its establishment, RGGI’s priorities have centered around reducing pollution from fossil fuel power plants and achieving climate solutions for RGGI states. Every five years or so, RGGI undergoes a program review, giving the participating states the opportunity to consider the program’s performance and make various changes including the equitable disbursement of the program’s proceeds. RGGI’s Third Program Review is happening now. According to their recent Program Review Update, RGGI Inc. will be holding public meetings soliciting comments and engaging with Environmental Justice communities throughout Spring and Summer of 2023.
As discussed in more detail in Acadia Center’s blog post The Third RGGI Program Review Should Advance Equitable Investments and Climate Goals. The Third Program review offers a good opportunity to ensure that environmental justice communities are heard and are actively involved in the development of strategies to ensure a smooth, equitable transition to a carbon-free economy. This ongoing program review provides a chance for states to consider the recent auctions, history of investments across the states, the need to directly address environmental justice communities, and other mechanisms associated with the cap-and-invest program.
Acadia Center remains closely involved in RGGI policy conversations across the RGGI states and will continue to advocate for program reforms that drive equitable investment and climate action.
Acadia Center is a northeast-based nonprofit research and advocacy organization advancing a safe climate and a clean energy future that benefits everyone.