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RGGI CO2 allowance prices slide ahead of latest quarterly auction

Over-the-counter prices for carbon dioxide allowances under the Regional Greenhouse Gas Initiative slipped in value to kick off June.

As of June 4, broker data showed the June 2018 vintage 2018 RGGI allowance contract was pegged in a bid-and-ask range of $3.86/ton to $3.94/ton, easing 5 cents from the end of May. The benchmark December 2018 vintage 2018 RGGI allowance contract was seen in a bid-and-offer spread of $3.96/ton to $4.00/ton as of June 4, dropping 18 cents from the middle of May.

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Secondary market RGGI prices were aimed lower ahead of the program's June 13 allowance auction, at which time more than 13.7 million RGGI allowances will be for sale. A reserve price of $2.20/ton will be used.

Additionally, there will be a 10 million allowance cost containment reserve available during the June auction. The reserve will be accessed only if the interim clearing price exceeds the cost containment reserve trigger price of $10.25/ton for this year.

In RGGI's prior auction held in March, 100% of the more than 13.5 million CO2 allowances on offer were purchased at a clearing price of $3.79/ton, down 1 cent from the December 2017 auction.

The RGGI states are comprised of 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.

According to a recent report from the RGGI, 161 of the 163, or 98.8%, of the power plants under the regional cap-and-trade program met their compliance obligations during the third three-year control period. In terms of emissions, 99.9% of covered power-sector emissions were in compliance during the third control period, which ran from Jan. 1, 2015, through Dec. 31, 2017.

Average RGGI CO2 emissions for the control period were 75.5 million short tons, down more than 50% from power-sector emissions across the region since 2005.

This year's RGGI cap is 82.2 million short tons. The RGGI states also include interim adjustments to the RGGI cap to account for banked CO2 allowances, making the RGGI adjusted cap 60.3 million short tons.

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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.