RGGI auction sets new high clearing price

OREANDA-NEWS. The first Regional Greenhouse Gas Initiative (RGGI) CO2 allowance auction of 2014 cleared at \$5.41/short ton, the highest price of any auction to date.

The 11 March auction sold all 15.3mn allowances offered, generating more than \$82mn for the nine northeast states participating in the cap-and-trade program for power sector CO2 emissions, RGGI said today. The clearing price beat the previous high, set in December, by 20?. Demand for allowances at the auction was 2.8 times greater the volume offered.

A cost-containment reserve of 10mn allowances was available, but none of the allowances was sold as the auction did not reach the trigger price of \$6. Last year's reserve of 5mn st sold out at the first auction after it cleared at the previous trigger price of \$4/st. The 10mn allowances will carry over to the next auction, to be held in June.

The auction was the first of the new control period, which covers 2015-2017. This year's emissions cap is set at 66.8mn st, a 19pc reduction from 2014. The steep decline is the result of cap adjustments made by RGGI last year to account for an bank of about 140mn allowances prior to 2014. Allowances can be banked forward for compliance in later years.