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Over-the-counter prices for Northeast carbon market advance

Over-the-counter prices for carbon dioxide allowances under the Regional Greenhouse Gas Initiative were higher during the week ended May 26.

Secondary market prices for the June 2017 vintage 2017 contract was quoted in a bid-and-offer range of $2.52/ton to $2.63/ton. As of May 26, the May 2017 vintage 2017 contract ended its run in a bid-and-ask spread of $2.55/ton to $2.62/ton, increasing 3 cents from the start of the month.

As of May 29, the benchmark December 2017 vintage 2017 futures contract was eyed in a bid-and-ask spread of $2.57/ton to $2.66/ton, rising 4 cents from prior assessments.

SNL Image

SNL Image

The RGGI participating states will hold their next quarterly allowance auction June 7. At the sale, a total of 14,597,470 allowances — 22,279 allocation year 2015 allowances and 150,040 allocation year 2016 allowances — will be placed on the auction block. A reserve price of $2.15/ton will be used.

Additionally, 10 million cost containment reserve allowances will be available in the June auction. The cost containment reserve is a fixed additional supply of RGGI allowances that is only accessed if the interim clearing price exceeds the reserve trigger price, which is set at $10.00/ton.

At the RGGI program's previous quarterly auction in March, which cleared at $3.00/ton, the lowest clearing price since December 2013, 100% of the more than 14.3 million CO2 allowances on offer were purchased. The clearing price was down 55 cents, or more than 15%, from the December 2016 RGGI auction.

At the secondary market, RGGI CO2 allowance futures prices extended lower during the first quarter, falling 17% from the final quarter of 2016 to an average of $3.43/ton, according to a quarterly report released by independent market monitor Potomac Economics. RGGI CO2 allowance prices sank 43% from the same quarter in 2016.

RGGI CO2 allowance prices were volatile in the first quarter of 2017, initially pegged near $3.50/ton in January and rising to about $4.00/ton in early February. Following a clearing price of $3.00/ton in the RGGI program's quarterly auction in March, secondary market prices ranged between $3.05/ton and $3.30/ton for the remainder of the quarter.

The RGGI participating states — Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont — 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.