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Latest Northeast carbon cap-and-trade program auction clears at $2.53/ton

In the Regional Greenhouse Gas Initiative's second quarterly auction of the year, 100% of the 14,597,470 carbon dioxide allowances on offer were purchased at a clearing price of $2.53/ton.

Results of the June 7 sale were released by RGGI on June 9 and showed the clearing price was down 47 cents, or almost 16%, from the program's prior auction price of $3.00/ton and to the lowest level in nearly five years since the RGGI December 2012 sale.

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Auction bids for the RGGI allowances ranged from a low at the reserve price of $2.15/ton to a high of $6.00/ton. There were 40 bidders in the June RGGI auction, with the ratio of bids coming in at 2.1 times the total amount of allowances.

RGGI said 49% of the allowances sold in the June auction were bought by compliance entities, or their affiliates. Compliance-oriented entities purchased 36% of the allowances in the recent sale.

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The auction clearing price was not high enough to trigger the sale of allowances from the cost containment reserve, or CCR. The CCR is a fixed additional supply of allowances that are only available for sale if CO2 allowance prices exceed certain price levels: $10 this year and rising by 2.5% each year thereafter to account for inflation

The latest RGGI auction netted roughly $36.9 million. Cumulative proceeds from all of the RGGI's 36 allowance auctions to date exceed $2.7 billion.

As of June 8, over-the-counter RGGI allowance prices were down slightly from earlier in the month, with the benchmark December 2017 vintage 2017 futures contract assessed in a bid-and-offer range of $2.50/ton to $2.70/ton.

The RGGI participating states use a market-based cap-and-trade program to reduce emissions from regional power plants, selling nearly all emissions allowances through auctions and investing proceeds in energy efficiency projects. RGGI is made up of nine states: Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont.

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