trending Market Intelligence /marketintelligence/en/news-insights/trending/J0nfnegPIbK1876Mn1yQHA2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us
In This List

OTC RGGI CO2 allowance prices claw back toward $5/ton

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


OTC RGGI CO2 allowance prices claw back toward $5/ton

Secondarymarket CO2 allowance prices under the Regional Greenhouse Gas Initiative headedback toward $5.00/ton during the first week of May. The RGGI spot allowancecontract was assessed in a bid-and-ask spread of $4.95/ton to $5.00/ton as ofMay 3, up 1 cent from the week prior.

Brokerdata showed the RGGI May 2016 vintage 2016 futures contract was marked in abid-and-offer range of $4.90/ton to $5.10/ton, increasing 4 cents week overweek. As of May 3, the benchmark December 2016 vintage 2016 futures contractwas seen in a bid-and-ask spread of $5.00/ton to $5.20/ton, rising 7 cents fromthe week before.

Climbingabove $8.00/ton in January, secondary market RGGI CO2 allowance pricesslumped almost 50% invalue in mid-February after the U.S. Supreme Court stayed the U.S. EPA's CleanPower Plan. It had been anticipated that the nine RGGI participating stateswould use the regional cap-and-trade program as a mechanism for compliance withthe Clean Power Plan.

Whilethe secondary market rebounded a bit shortly after the massive slump, RGGI CO2allowance prices have largely remained soft, hovering near $5.00/ton.

RGGI'snext quarterly auctionwill be held June 1, at which time a total of 15,089,652 allocation year 2016CO2 allowances will be offered. A reserve price of $2.10/ton will be used again.

Onceagain, 10 million cost containment reserve allowances will be available duringthe June auction. Thecost containment reserve is a fixed additional supply of CO2 allowances that isonly accessed if the interim clearing price exceeds the cost containmentreserve trigger price. For the current year, the trigger price level is$8.00/ton.

InRGGI's prior auction held in March, 100% of the more than 14.8 millionallocation year 2016 CO2 allowances on offer were purchased at a clearing priceof $5.25/ton. The auction price dropped $2.25, or 30%, from the prior quarterlysale price in December 2015, which set a record high at $7.50/ton.

The RGGIis made up of Connecticut, Delaware, Maine, Massachusetts, Maryland, NewHampshire, New York, Rhode Island and Vermont. The participating states use amarket-based cap-and-trade program to reduce greenhouse gas emissions fromregional power plants, selling nearly all emissions allowances through auctionsand investing proceeds in energy efficiency projects in the residential,commercial and municipal sectors.

TheRGGI participating states are undergoing a program review this year, duringwhich time changes to the Northeast cap-and-trade program's rules, particularlyin light of the Clean Power Plan, will be considered.

RGGIofficials have requested stakeholder comments on the minimum compatibilityrequirements under which the current RGGI states could decide to tradeallowances with states that are not participants of the RGGI program.

Topicsfor consideration include the fungibility of allowances; treatment of newlyconstructed emission sources; overall stringency; allowance tracking systems;market monitoring and reporting; distribution of allowances; auctioning; use ofproceeds from sale of allowances; administrative costs; additional linkageswith other states or regions; and implications for RGGI states' use ofemissions standard approach for Clean Power Plan implementation.

Writtencomments are due back to RGGI by 5 p.m. ET on May 9.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including powerand naturalgas index prices, as well as forwardsand futures,visit our Commodities Pages.