For Release: December 22, 2023
BOSTON, MA – On Wednesday, December 6, 2023, the eleven states participating in the Regional Greenhouse Gas Initiative (RGGI) released the results of the 62nd auction for 2023. Emissions allowances were sold for $14.88 each, generating $411.5 million for clean energy investments in participating states.
“The incredible success of this auction speaks volumes—$411.5 million raised brings RGGI’s cumulative total to a staggering $7.16 billion,” stated Paola Tamayo, Policy Analyst at Acadia Center and co-author of the organization’s RGGI Third Program Review Report. “What’s even more exciting is that both the proceeds from allowances and the clearing price hit record highs in this 62nd auction, marking a historic moment for RGGI as the program nears the conclusion of its Third Program Review.”
The allowance price for the RGGI program is the highest in 2023 and remains above the historical average. The Cost Containment Reserve (“CCR”), a market mechanism that releases extra allowances beyond the cap which are sold if prices exceed predetermined levels, was triggered in this auction. The Trigger Price of $14.88 per ton of CO2 was met, and 5,565,291 CCR allowances were sold in the auction. The Emissions Containment Reserve (ECR) retains allowances for additional emissions reductions if prices fall below the trigger price of $6.87 in 2023. Notably, the ECR remains well below the average 2023 price and has historically not been triggered.
Higher RGGI allowance price is good for climate, clean energy investment
The clearing price of $14.88 in 2023 marks a continuation of the upward trend observed in recent years. This clearing price represents a 15% increase from the clearing price in December 2022. In total, the average 2023 auction price is only 0.2% higher than the average 2022 auction price. The positive trajectory witnessed in the 2023 auctions holds promising implications for the RGGI program. Having higher allowance prices seen in 2022 and 2023 means that the RGGI program is sending a stronger incentive to produce electricity from carbon-free sources, like wind and solar. Recent auctions demonstrate the growing significance of the CCR – this recent auction was the first time since 2021 that additional allowances were released because of triggering the CCR. The triggering of the CCR results in an influx of additional allowances into the market, which means that it’s potentially lowering the overall stringency of the emission reduction targets.
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 2021, released in June of this year.
The $411.5 million in proceeds generated in this auction brings the cumulative to-date total to $7.16 billion. The 2023 auction results underscore RGGI’s significance as more than a regulatory framework, emphasizing its influence on the shift towards sustainable energy. RGGI states show the practicality of a collaborative, market-driven strategy for reducing greenhouse gas emissions. Notably, this year’s proceeds are 81% higher than the combined proceeds from 2019 and 2020 and stand 6% higher than the proceeds recorded in 2022.
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 and will likely conclude early next year. In 2023, RGGI held two public meetings and two public comment periods to discuss and seek feedback on various aspects of the program. Acadia Center, other stakeholders, and the public at large await any responses from the states to public input on setting the cap and improving overall program design and operation.
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As discussed in more detail in Acadia Center’s most recent RGGI Report, there are many different ways in which RGGI can start to ensure that environmental justice communities are heard and are actively involved in the development of strategies for an equitable transition to a carbon-free economy. Regardless of how strongly the Third Program Review does or does not prioritize environmental justice, it should remain a priority for individual states to consider the recent auctions, the history of investments across the states, the need to benefit environmental justice communities directly, 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.
Ben Butterworth, Director: Climate, Energy, and Equity Analysis
email@example.com, 617-742-0054 x111
Paola Moncada Tamayo, Policy Analyst
firstname.lastname@example.org, 860-246-7121 x204