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Over-the-counter RGGI CO2 allowances renew downside trek


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Over-the-counter RGGI CO2 allowances renew downside trek

Followingstrength the week before, secondary market prices for Regional Greenhouse GasInitiative CO2 allowances were poised lower during the week ended April 13. TheRGGI spot allowance contract was marked in a bid-and-offer range of $5.25/tonto $5.35/ton, down 13 cents week over week.

Asof April 13, the RGGI April 2016 vintage 2016 futures contract was marked in abid-and-offer range of $5.25/ton to $5.35/ton, easing 23 cents from the weekbefore. The benchmark December 2016 vintage 2016 futures contractwas quoted, as of April 13, in a bid-and-offer range of $5.25/ton to $5.40/ton,losing 30 cents week over week.

Soaringabove $8.00/ton early in the year, secondary market RGGI CO2 allowance pricescrumbled almost 50%in value in mid-February to between $4.00/ton and $5.00/ton following a wave ofselling and liquidation triggered by the news that the U.S. Supreme Courtunexpectedly granted a stayof the U.S. Environmental Protection Agency's Clean Power Plan, effectivelyputting the rule on hold. It had been anticipated that the nine RGGIparticipating states would use the regional cap-and-trade program as amechanism for compliance with the Clean Power Plan.

Whilerebounding shortly thereafter, over-the-counter RGGI CO2 allowance pricesresumed a downside trek in the wake of the program's quarterly auction of the year.During the sale, 100% of the more than 14.8 million allocation year 2016 CO2allowances on offer were purchased at a clearing price of $5.25/ton. The Marchauction price dropped $2.25, or 30%, from the program's prior quarterly saleprice in December 2015, which was a record high at $7.50/ton.

Inthe next quarterly auctionto be held by the RGGI states June 1, a total of 15,089,652 allocation year2016 CO2 allowances will be offered for sale. A reserve price of $2.10/ton willbe used in the June auction.

Additionally,all 10 million cost containment reserve allowances will be available. The costcontainment reserve is a fixed additional supply of CO2 allowances that is onlyaccessed if the interim clearing price exceeds the cost containment reservetrigger price. For the current year, that price level is $8.00/ton.

RGGIis comprised of nine states: Connecticut, Delaware, Maine, Massachusetts,Maryland, New Hampshire, New York, Rhode Island and Vermont. The participatingstates use a market-based cap-and-trade program to reduce greenhouse gasemissions from regional power plants, selling nearly all emissions allowancesthrough auctions and investing proceeds in energy efficiency projects in theresidential, commercial and municipal sectors.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including powerand naturalgas index prices, as well as forwardsand futures,visit our Commodities Pages.