Over-the-counter prices for carbon dioxide allowances under the Regional Greenhouse Gas Initiative eased during the week ended Dec. 26 but remained near $4.00/ton.
As of Dec. 26, the benchmark December 2017 vintage 2017 contract was marked in a bid-and-ask range of $3.95/ton to $4.05/ton, down 4 cents from the week prior. The December 2018 vintage 2018 contract was seen in a bid-and-ask range of $4.05/ton to $4.17/ton, easing 3 cents on the weekly period.
After more than 18 months of stakeholder meetings and modeling, the RGGI states officially concluded their program review recently, setting into motion the process for each of the nine member states to approve the final rule that would bring about changes to the program in 2021.
At the end of August, the RGGI states proposed a series of changes to the regional cap-and-trade program, including a cut to the emissions ceiling by an additional 30% by 2030, relative to 2020 levels. Under the proposal, the RGGI cap would decline by 2,275,000 tons of CO2 per year, from 2021 through 2030, yielding a total reduction of 22,750,000 tons of CO2, or 30% of the 2020 cap.
Other proposed changes to the RGGI program after 2020 include implementing an emissions containment reserve. The emissions containment reserve would allow states to withhold up to 10% of their annual emissions allowances in reserve, restricting the sale of those allowances when prices fall below certain predetermined levels.
RGGI is composed of 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.
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