RGGI raises $117m through latest auction

The first mandatory carbon cap-and-trade scheme in the US, the Regional Greenhouse Gas Initiative, undertook its third auction of carbon allowances last week, raising more than $117m (£80.5m) for investment in energy efficiency and renewable energy projects.

The auction successfully sold more than 31.5 million 2009 allowances for $3.51 per allowance, and also sold the first wave of more than 2.1 million credits at $3.05 per allowance for use in the second phase of the scheme starting in 2012.

Pete Grannis, chairman of the RGGI board of directors, hailed the latest auction as a success, adding that it had raised $117m for low carbon initiatives across the 10 RGGI member states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.

"The states are very pleased with the results from the latest RGGI auction," he said, adding that the early success of the scheme provided "further support for President Obama's position that a national cap-and-trade program with allowance auctions is the right policy for the country and the right approach for addressing the most pressing environmental and economic issue of our time: climate change".

The $3.51 per allowance price is an increase on the $3.38 commanded in the last auction in December and the $3.07 achieved back in the first auction last September.

Market watchers said that steadily rising prices were running contrary to an oversupply of allowances in the embryonic cap-and-trade scheme that has resulted as levels of industrial output and associated emissions have fallen. However, firms are thought to be buying up larger numbers of allowances than they require on the assumption that they will be able to transfer those credits over into the federal cap-and-trade scheme that President Obama has pledged to introduce.