Over-the-counter market prices for Regional Greenhouse Gas Initiative CO2 allowances ended December and 2016 on a quiet note.
As of Dec. 29, the RGGI spot allowance contract was discussed in a bid-and-offer range of $3.40/ton to $3.50/ton, down 1 cent week over week. The January 2017 vintage 2017 contract was pegged in a bid-and-ask spread of $3.40/ton to $3.50/ton as well, little changed from a week earlier.
The new benchmark December 2017 vintage 2017 contract was quoted in a range of $3.50/ton to $3.64/ton as of Dec. 29. The December 2016 vintage 2016 contract rolled off the board in a bid-and-offer range of $3.40/ton to $3.50/ton on Dec. 23.
Secondary market prices for RGGI CO2 allowances fumbled in early December after the participating states held their final quarterly auction for the year, which saw weak results. 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. Uncertainty surrounding the future of the Clean Power Plan, which is on hold and awaiting a ruling by the D.C. Circuit, would require states to meet individual carbon emissions rate reductions at existing power plants beginning in 2022.
However, 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.
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.
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