Latest Regional Greenhouse Gas Initiative Auction Nets $25.5 Million

The Regional Greenhouse Gas Initiative, the United States' first market-based regulatory mechanism to reduce carbon emissions, has completed its 12th quarterly carbon credit auction.

The auction [pdf] saw 12,537,000, or 30%, of the 42,034,184 available carbon allowances sold.  25 entities submitted successful bids to acquire allowances.  The allowances sold for between $1.89 and $7.40; collectively $25.5 million was generated from the auction.  91% of the credits were purchased by electric utilities. 

Each credit is worth the equivalent of one short ton of carbon dioxide.  The current cap on emissions is 188 million short tons per year.  All entities that produce higher levels of CO2 must purchase credits. 97% of all allowances that have been auctioned off since RGGi's inception have been purchased by electric generators.

Formed in 2007, RGGI's 12 auctions have netted $886.4 million.  This money has been filtered back into the initiative's ten member states through clean energy and energy efficiency programs.

Colin O'Mara, Secretary of the Delaware Department of Natural Resources and Environmental Control, said, "As we near the end of the first compliance period with significantly reduced carbon emissions, electricity generators require fewer allowances. Today's auction results show the success of the RGGI market-based system in distributing allowances efficiently and contributing to emissions reductions."

David Littelll, a Commissioner of the Maine Public Utilities Commission, added, "The RGGi auctions are continuing to drive large-scale investments in energy bill savings and improved business competitiveness."

These opinions vastly differ from the stance of New Jersey's Governor Chris Christie, who recently announced he would be pulling his state out of the initiative at the end of 2011. 

Gov. Christie asserts the cost of RGGI's allowance are not expensive enough to alter behaviour from major emitters.  The industry projected the cost of allowances would grow to be twenty or thirty dollars per ton; however, the current base price is under $2.  This price is not enough to push utilities to choose lower carbon solutions, Chrisite says.

At the press conference where he announced New Jersey would be leaving the initiative, Christie stated emphatically that RGGI was a failure:  "RGGI does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernible or measurable impact upon our environment."

New Jersey is not the only state reconsidering participation in the Regional Greenhouse Gas Initiative.  In May, the New Hampshire senate managed to amend legislation which passed in the state assembly calling for an exit from RGGI.  Similarly, Delaware and Maine have faced similar legislative battles in the last month.

Image credit: lowjumpingfrog via Flickr