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Northeast carbon market prices climb as trading action increases before year-end

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Essential Energy Insights - February 2021

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Northeast carbon market prices climb as trading action increases before year-end

Over-the-counter prices for Regional Greenhouse Gas Initiative CO2 allowances rebounded during the week ended Dec. 17.

The December 2019 vintage 2019 contract was pegged in a bid-and-ask range of $5.70/tonne to $5.75/tonne, gaining 6 cents from Dec. 9 pricing. The December 2020 vintage 2020 contract was discussed in a bid-and-offer spread of $5.89/ton to $5.95/ton, up 4 cents.

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Secondary market RGGI CO2 allowances prices ramped higher as trading activity picked up and participants rolled positions from the 2019 to 2020 contract before the end of the year.

RGGI allowance values are also advancing in the wake of the RGGI program's Dec. 4 auction. At the sale, more than 13 million allowances sold at a clearing price of $5.61/ton, up 41 cents from the prior auction in September.

RGGI said that 83% of the allowances purchased in the December auction were bought by compliance entities, and 48% were bought by compliance-oriented entities.

At RGGI's prior auction in September, 100% of the more than 13 million allowances on offer sold at $5.20/ton, or the lowest auction clearing price in a year.

The nine participating states are Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont. These 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.

The 46th RGGI quarterly auction netted $73.6 million for states to reinvest in strategic programs, including energy efficiency, renewable energy, direct bill assistance and greenhouse gas abatement programs.

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