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RGGI carbon allowance prices tick higher ahead of auction


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RGGI carbon allowance prices tick higher ahead of auction

Regional Greenhouse Gas Initiative carbon dioxide allowance prices at the over-the-counter market are moving higher in front of the program's next quarterly auction.

As of Feb. 26, the March 2018 vintage 2018 RGGI CO2 allowance contract was pegged in a bid-and-ask range of $4.00/ton to $4.21/ton. The February 2018 vintage 2018 contract ended its run in a bid-and-ask range of $4.02/ton to $4.10/ton on Feb. 23.

The benchmark December 2018 vintage 2018 RGGI CO2 allowance contract was marked in a bid-and-offer spread of $4.10/ton to $4.30/ton as of Feb. 26, up 3 cents from prior assessments.

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Secondary market RGGI prices are ticking higher ahead of the program's March 14 auction, at which time more than 13.5 million RGGI allowances will be placed on the auction block.

A reserve price of $2.20/ton will be used and there will be a 10-million allowance cost containment reserve available for the upcoming auction. The reserve will only be accessed if the interim clearing price exceeds the reserve trigger price of $10.25/ton set for this year.

In RGGI's December 2017 auction, 100% of the almost 14.7 million RGGI allowances on offer were purchased at a clearing price of $3.80/ton. This was down 55 cents, or about 12.6%, from the program's September 2017 auction, which cleared at $4.35/ton.

In other RGGI news, New Jersey Gov. Phil Murphy has formally notified governors of the RGGI participating states of his administration's commitment to rejoining the program. This follows the governor's executive order signed at the end of January that directs two state agencies to begin negotiating the state's entrance back into the carbon allowance trading program.

New Jersey had been part of RGGI since it was created in 2005, but former Gov. Chris Christie called the program nothing more than a tax and formally withdrew the state in early 2012.

The RGGI states are Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont. The nine 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. The 2017 model rule, released in December 2017, sets a 30% reduction in regional carbon dioxide emissions between 2020 and 2030.

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.