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Secondary RGGI CO2 allowance prices falter to end September

Regional Greenhouse Gas Initiative CO2 allowance secondarymarket prices stumbled to end the month of September. According to broker dataas of Sept. 28, the RGGI spot allowance contract was eyed in a bid-and-askspread of $4.47/ton to $4.65/ton, easing 2 cents from a week earlier.

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The RGGI September 2016 vintage 2016 contract was quoted ina bid-and-offer range of $4.47/ton to $4.65/ton. As of Sept. 28, the benchmarkDecember 2016 vintage 2016 futures contract was talked in a bid-and-ask spreadof $4.55/ton to $4.65/ton, easing 4 cents on the week.

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Over-the-counter RGGI CO2 allowance prices have been aimedlower recently in the wake of the program's third quarterly for the year. During the sale,held Sept. 7, 100% of the more than 14.9 million allocation year 2016 CO2allowances sold at a clearing price of $4.54/ton. Although demand was robust,the clearing price was up just 1 cent from the program's prior auction price of$4.53/ton in June.

RGGI is made up of Connecticut, Delaware, Maine,Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont. Theparticipating states use a market-based cap-and-trade program to reducegreenhouse gas emissions from regional power plants, selling nearly allemissions allowances through auctions and investing proceeds in energyefficiency and renewable energy projects.

Thus far, the 2016 RGGI review has focused on severalfactors, one of which includes accounting for implementation of the U.S. EPA'sClean Power Plan. The rule would require states to meet individual carbonemissions rate limits at existing power plants beginning in 2022. More thanhalf of U.S. states and several power industry groups filed suit in the D.C.Circuit to overturn the rule, but a coalition of 18 states and manyenvironmental organizations filed petitions to intervene in the case on the EPA'sbehalf. The U.S. Supreme Court stayed the rule in February until all legalchallenges are wrapped up.

In light of the climate goals that would be set forth by theClean Power Plan, discussions within RGGI have centered on the use of astricter program emissions cap of 5%. After a comprehensive reviewback in 2013, and in an attempt to bring the RGGI cap with actual emissionslevels, the participating states trimmed the ceiling by 45%, to 91 milliontons, in 2014. The RGGI emissions cap declines 2.5% each year thereafterthrough 2020. The 2016 RGGI cap is 86.5 million tons.

Market prices andincluded industry data are current as of the time of publication and aresubject to change. For more detailed market data, including power,naturalgas, and coalindex prices, as well as forwardsand futures,visit our Commodities Pages.