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RGGI secondary market prices run mixed; latest auction price drops to $5.20/ton

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RGGI secondary market prices run mixed; latest auction price drops to $5.20/ton

Over the counter prices for CO2 allowances under the Regional Greenhouse Gas Initiative trended mixed at the start of September while prices at the program's most recent quarterly auction moved considerably lower.

The August 2019 vintage 2019 RGGI contract concluded its spot month run in a bid and ask range of $5.13/ton to $5.21/ton on Aug. 30, down 14 cents from Aug. 1 assessments. The new spot month September 2019 vintage 2019 contract was seen in a bid and offer spread of $5.26/ton to $5.38/ton as of Sept. 5, increasing 9 cents from Sept. 3.

Broker data as of Sept. 5 showed the benchmark December 2019 vintage 2019 contract in a bid and ask range of $5.32/ton to $5.42/ton, flat to Aug. 1 pricing levels but up 22 cents from Aug. 21.

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Following a run higher earlier in the summer that was sparked in part by a heatwave in the Northeast that led to increased power burn by utilities, secondary market RGGI allowance prices dropped for much of August, as buying interest evaporated before the program held its Sept. 4 auction.

According to results released Sept. 6, 100% of the more than 13 million CO2 allowances on offer sold at $5.20/ton, down 42 cents from the prior auction price in June. Allowance bids in the September sale ranged from $2.26/ton to $8.00/ton from a total of 47 entities. The ratio of bids was 2.9 times the total amount of allowances on offer.

The September RGGI auction generated a total of $68.2 million for the nine participating states: 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 and investing the proceeds in various ways that vary state by state.

At the RGGI's previously held auction in June, 100% of the more than 13 million allowances cleared at $5.62/ton, up 35 cents from the program's March sale and the highest level since RGGI's December 2015 auction.

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