RGGI carbon auction raises more than $100m

The Regional Greenhouse Gas Initiative (RGGI), the US carbon cap-and-trade scheme covering 10 eastern states, has confirmed it raised more than $104m (£63m) for investment in low-carbon and energy-efficiency projects through its fourth auction of carbon permits last week.

All of the 30,887,620 allowances for 2009 were sold at a price of $3.23, while 2,172,540 allowances for the next period of the scheme starting in 2012 were sold for $2.06 each.

Potomac Economics, the research firm appointed to monitor the auctions, said both auctions were over-subscribed. Some 54 separate entities bidded to purchase 2.6 times the available 2009 allowances, and 13 organisations submitted bids for 1.5 times the available 2012 allowances.

In both auctions those heavy emitters required to purchase sufficient allowances to cover their annual emissions bought more than 80 per cent of the permits made available. Carbon trading specialists and investors are likely to have picked up the remaining allowances.

Speaking to BusinessGreen.com, Emily Mazzacurati of analyst Point Carbon said the prices were largely in line with expectations, adding that they were likely to remain relatively stable for the rest of the year.

US legislators are currently debating the introduction of legislation that would enable the introduction of a nationwide cap-and-trade scheme, and Pete Grannis, chair of the RGGI board of directors, said the regional scheme provided important evidence that "auction-based cap-and-trade works, and can lead us to a new economy with green jobs, a clean energy infrastructure and a better environment".

Under the RGGI, emissions from carbon-intensive sectors in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont have been capped at current levels through to 2014. From 2014 onwards the cap will be reduced by 2.5 per cent each year until 2018.

Mazzacurati said the auctioning system had been well designed, adding that the practice of ring-fencing the money raised for investment in renewable energy and energy-efficiency measures had helped to secure support for the scheme.