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RGGI over-the-counter allowance prices edge higher as NJ may rejoin program

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RGGI over-the-counter allowance prices edge higher as NJ may rejoin program

Regional Greenhouse Gas Initiative over-the-counter prices pushed higher during the final week of January amid news that New Jersey could re-enter the regional cap-and-trade program.

The February 2018 vintage 2018 RGGI CO2 allowance contract was seen in a bid-and-ask range of $4.20/ton to $4.32/ton as of Jan. 31. The benchmark December 2018 vintage 2018 RGGI CO2 allowance contract was marked in a bid-and-offer spread of $4.29/ton to $4.40/ton, up 2 cents week over week.

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Newly inaugurated New Jersey Gov. Phil Murphy, a Democrat, signed an executive order Jan. 29 that directs two state agencies to begin negotiating the state's re-entry into the RGGI. Within the next 30 days, the two agencies are to start a regulatory process to write rules to join RGGI, according to the order.

In New Jersey, legislators have already been trying to require the state to rejoin the RGGI. The Senate Environment and Energy Committee recently adopted two bills, which would require the state to do just that. Under former Gov. Chris Christie, a Republican, New Jersey left the RGGI at the end of 2011, asserting that the program had not substantially lowered emissions in the state, had a negative impact on its economy and led to higher electric rates for consumers.

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

The RGGI participating states will hold their next quarterly allowance auction March 14, offering for sale 13.5 million carbon dioxide allowances. In RGGI's December 2017 auction, 100% of the almost 14.7 million allowances on offer were purchased at a clearing price of $3.80/ton. This was down 55 cents, or about 12.6%, from the program's September 2017 auction, which cleared at $4.35/ton.

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