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Northeast carbon allowance market activity kicks off year with light trading

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Northeast carbon allowance market activity kicks off year with light trading

Trading activity in the Regional Greenhouse Gas Initiative carbon dioxide allowance secondary market started the new year in light fashion.

As of Jan. 7, the new benchmark December 2019 vintage 2019 contract was eyed in a bid-and-offer range of $5.65/ton to $5.85/ton, down 3 cents from prior assessments made at the end of December 2018.

As of Dec. 21, 2018, the December 2018 vintage 2018 RGGI allowance contract ended its run in a bid-and-ask spread of $5.45/ton to $5.56/ton, up 20 cents from the beginning of December 2018.

RGGI secondary market prices are shaking out following the program's final auction of the year, which saw 100% of the more than 13.3 million allowances sell at $5.35/ton each, up 85 cents from the prior auction in September 2018 and the highest clearing price since December 2015.

The latest RGGI auction netted more than $61.2 million for Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont. The nine 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.

Meanwhile, the RGGI participating states will hold a meeting Jan. 31 seeking stakeholder input regarding New Jersey re-entering the program.

In December 2018, New Jersey proposed two rules to rejoin the RGGI. One of the proposed rules establishes the mechanisms for rejoining and sets the initial carbon dioxide cap for the state's electricity generation sector at 18 million tons in 2020, when the state will officially begin participating again. The other proposed rule establishes the framework for how New Jersey will spend proceeds from RGGI allowance auctions.

Under former Gov. Chris Christie, a Republican, New Jersey left the RGGI at the end of 2011, with officials saying the program had not substantially lowered emissions in the state, had a negative impact on its economy and led to higher electric rates for consumers.

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