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RGGI carbon allowance prices run mixed to start October


According to Market Intelligence, December 2022


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RGGI carbon allowance prices run mixed to start October

At the over-the-counter market, prices for Regional Greenhouse Gas Initiative carbon dioxide allowances were mixed during the week that ended Oct. 10.

Broker data showed the October 2017 vintage 2017 RGGI contract was assessed in a bid-and-offer spread of $4.27/ton to $4.37/ton, down 5 cents from the week prior.

As of Oct. 10, the benchmark December 2017 vintage 2017 contract was marked in a bid-and-ask range of $4.30/ton to $4.43/ton, up 2 cents on the week.

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SNL Image

At the end of August, secondary market values for RGGI allowances rallied above $4.50/ton after the nine RGGI states announced proposed program changes, including a cut to the emissions ceiling by an additional 30% by 2030, relative to 2020 levels.

Under the proposal, the RGGI cap would decline by 2,275,000 tons of CO2 per year, from 2021 through 2030, yielding a total reduction of 22,750,000 tons of CO2, or 30% of the 2020 cap. The RGGI states are also proposing additional adjustments to the RGGI cap, to be implemented from 2021 to 2025, to account for the full bank of excess allowances at the end of 2020.

The RGGI participating states will hold their last quarterly allowance auction of the year Dec. 6, according to a recent notice. The 38th RGGI auction will offer 14,687,989 CO2 allowances. The offering will comprise allocation year 2017 CO2 allowances as well as 88,808 allocation year 2015 and 227,595 allocation year 2016 allowances from state set-aside accounts.

The RGGI states will again use a reserve price of $2.15/ton. Additionally, there will be a 10 million-allowance cost-containment reserves available for the upcoming auction. The reserve will be accessed if the interim clearing price exceeds the cost-containment reserve trigger price of $10.00/ton.

In the RGGI program's prior quarterly auction held in September, 100% of the 14,371,585 carbon dioxide allowances on offer were purchased at a clearing price of $4.35/ton. Results of the Sept. 6 sale showed that the price spiked $1.82, or almost 72%, from the program's previous auction price of $2.53/ton, which was the lowest since December 2012.

The RGGI states are comprised of Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont. They 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.