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Northeast carbon allowance prices recover slightly after heavy losses

Following hefty losses the week prior that sent values below $4.00/ton, secondary market prices for Regional Greenhouse Gas Initiative CO2 allowances rebounded slightly during the week ended Dec. 20. The RGGI spot allowance contract was discussed in a bid-and-offer range of $3.40/ton to $3.52/ton as of Dec. 20, gaining 12 cents on the week.

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Broker data shows the December 2016 vintage 2016 contract pegged in a bid-and-ask spread of $3.40/ton to $3.52/ton, also rising 12 cents from the week before.

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Over-the-counter prices for RGGI CO2 allowances tumbled earlier this month in the aftermath of the results of the program's final quarterly auction for the year. At the Dec. 7 sale, 100% of the more than 14.7 million allocation year 2016 allowances on offer sold at a clearing price of $3.55/ton, which was down 99 cents, or almost 22%, from the prior RGGI auction in September, which came in at $4.54/ton.

The RGGI states are wrapping up a year-long review with a focus on the possible tightening of the program's emissions cap, as well as coordination with the implementation of the U.S. EPA's Clean Power Plan. But the fate of the Clean Power Plan, which is on hold and awaiting a ruling by the D.C. Circuit, is unclear. The rule would require states to meet individual carbon emissions rate reductions at existing power plants beginning in 2022.

After the U.S. presidential election was held in early November, secondary market RGGI CO2 futures prices slipped amid the belief that the Clean Power Plan will not survive under President-elect Donald Trump.

Earlier this week, the EPA indicated it was withdrawing the Clean Power Plan's model trading rules and other related projects and simply posted the work the agency has been completed as a working draft before the new administration takes over. Since the Clean Power Plan was put on hold, the EPA has been under pressure to stop working on projects related to the rule. But the agency also received requests from some states that wanted to see the model rules completed.

RGGI is comprised of nine states: Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont. The participating 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 in the residential, commercial and municipal sectors.

Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.