RGGI Allowance Prices Stabilize as RI Governor is Pushed to Take Lead in Program Review
Member states of the Regional Greenhouse Gas Initiative (RGGI) today announced the results of the 31st quarterly auction of carbon dioxide (CO2) allowances. 14,838,732 allowances were sold at a clearing price of $5.25. This clearing price is 30% lower than the previous auction, and 3% lower than the clearing price from one year ago. The RGGI states raised $77,903,343 million dollars from Auction 31, and have now raised $2.45 billion for reinvestment since the program began, the majority of which has been used to fund energy efficiency and other consumer benefit programs. RGGI has been a successful model for reducing power sector emissions, and with forward-looking improvements through the 2016 Program Review, RGGI will help member states makes progress toward achieving their long-term emissions reduction commitments.
The secondary market for RGGI allowances has seen significant fluctuation in prices since the last auction, which cleared at a record high price of $7.50 per allowance. After prices climbed as high as $8.50, the market quickly fell to $4.00, followed by a steady rise to Wednesday’s clearing price of $5.25. The sudden drop in allowance prices followed the Supreme Court’s stay of the Clean Power Plan, suggesting that there may have been concerns about the stay’s potential impact on the RGGI market. As with all commodities, RGGI allowances will experience volatility, but RGGI’s future as an established emissions reduction policy and effective market are secure, and the results of Auction 31 show a renewed confidence in RGGI’s future.
“Despite the Supreme Court’s decision to issue a stay on the Clean Power Plan, many states are continuing to develop plans for their clean energy futures,” said Acadia Center President, Daniel Sosland. “Through the 2016 Program Review, the RGGI states have an opportunity to continue demonstrating leadership by establishing ambitious cap levels through 2030.”
The results of this latest auction come as RGGI stakeholders gather today in Rhode Island to discuss the state’s climate plans. Rhode Island, like the rest of the RGGI states, has committed to achieving significant, economy-wide emissions reductions by 2030 (35-45% below 1990 levels in Rhode Island). “In order to meet the state’s 2030 goal, Rhode Island will need to achieve major emissions reductions from the electric sector,” said Jordan Stutt, Policy Analyst at Acadia Center. In a letter sent to Governor Raimondo yesterday, Acadia Center and other stakeholders urged Rhode Island to establish the aggressive RGGI cap levels necessary to meet the state’s economy-wide targets most cost effectively.
“The results of Auction 31 are another page in RGGI’s success story,” said Peter Shattuck, Director of Acadia Center’s Clean Energy Initiative. “The region’s electric sector emissions fell yet again in 2015, while RGGI auctions continue to bring in revenue for reinvestment in energy efficiency and renewable energy, creating jobs and accelerating the transition to a clean energy future.”
Additional information on RGGI’s performance to date, and role in EPA’s regulatory process are described in Acadia Center’s July, 2015 report: RGGI: A Model Program for the Power Sector
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
Jordan Stutt, Policy Analyst
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Kiernan Dunlop, Communications Associate
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Acadia Center is a non-profit, research and advocacy organization committed to advancing the clean energy future. Acadia Center is at the forefront of efforts to build clean, low-carbon and consumer-friendly economies. Acadia Center provides accurate and reliable information, and offers a real-world and comprehensive approach to problem solving through innovation and collaboration.