During the week that ended March 27, secondary market CO2 allowance prices under the Regional Greenhouse Gas Initiative continued to move higher. Over-the-counter broker data showed the March 2017 vintage 2017 contract was pegged in a bid-and-offer spread of $3.14/ton to $3.19/ton as of March 27, rising about 5 cents from its prior weekly assessment.
The December 2017 vintage 2017 futures contract was marked in a bid-and-ask range of $3.21/ton to $3.28/ton, increasing 5 cents as well on the weekly period.
Secondary market prices for RGGI CO2 allowances leaked lower after the participating states held their first quarterly auction for the year in early March. At the sale, 100% of the more than 14.3 million CO2 allowances on offer were purchased at a clearing price of $3.00/ton, down 55 cents, or more than 15%, from the program's prior auction in December 2016. The March RGGI auction saw the lowest clearing price since the December 2013 sale, which also cleared at $3.00/ton.
The RGGI is comprised of nine states — Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont — that 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 in the residential, commercial and municipal sectors.
In other RGGI news, a bill that would require New Jersey to re-enter the RGGI was released for preliminary action by the New Jersey Senate Environment and Energy Committee on March 20. The bill, S3059, which was first introduced March 6 by Sens. Stephen Sweeney and Bob Smith, both Democrats, and referred to the New Jersey Senate committee, would require the state's full participation in the RGGI.
Back in 2011, Gov. Chris Christie, a Republican, announced that New Jersey would leave the RGGI program by the end of that year, asserting that the state's involvement in the RGGI had not substantially lowered emissions and had left a negative impact on economic growth.
In August 2015, the New Jersey Department of Environmental Protection formally repealed the state's CO2 budget trading rules that allowed for the state's prior participation in the RGGI. Despite resistance from environmental groups and others, the New Jersey DEP first published the rulemaking to officially withdraw the state from the RGGI program in July 2014.
The move followed a March 2014 decision from the New Jersey Superior Court that found that Christie and the DEP illegally withdrew the state from the RGGI. To comply with the court's ruling, the DEP issued the proposal to repeal the CO2 budget trading rules since they were no longer applicable due to the state's withdrawal from the RGGI.
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