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Northeast carbon market prices slide before auction

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Northeast carbon market prices slide before auction

Secondary market prices for carbon dioxide allowances under the Regional Greenhouse Gas Initiative slid in value ahead of the program's next quarterly auction in March.

As of Feb. 14, the February 2018 vintage 2018 RGGI CO2 allowance contract was seen in a bid-and-offer spread of $3.97/ton to $4.20/ton, down 16 cents from prior assessments in early February.

Broker data showed the benchmark December 2018 vintage 2018 RGGI CO2 allowance contract was quoted in a bid-and-ask range of $4.08/ton to $4.25/ton, easing 20 cents from previous assessments.

Over-the-counter RGGI prices tumbled in front of the program's next quarterly allowance auction to be held March 14. At the sale, more than 13.5 million RGGI allowances will be placed on the auction block.

A reserve price of $2.20/ton will be used and there will be a 10 million allowance cost containment reserve available for the upcoming auction. The reserve will only be accessed if the interim clearing price exceeds the reserve trigger price of $10.25/ton set for this year.

In RGGI's December 2017 auction, 100% of the almost 14.7 million RGGI 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.

The RGGI states are 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.

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