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Northeast carbon allowance prices edge lower to start April

Over-the-counter prices for CO2 allowances under the Regional Greenhouse Gas Initiative were aimed slightly lower to kick off the first week of April.

According to broker data, the April 2017 vintage 2017 contract was seen in a bid-and-ask range of $3.10/ton to $3.18/ton as of April 4, down 2 cents from prior weekly assessments. As of April 4, over-the-counter broker data showed the December 2017 vintage 2017 futures contract in a bid-and-offer spread of $3.18/ton to $3.25/ton, easing 3 cents from the week prior.

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SNL Image

RGGI CO2 allowances at the secondary market have largely been on the defensive after the participating states held their first quarterly auction for the year in early March.

At the auction, 100% of the more than 14.3 million RGGI CO2 allowances on offer were purchased at a clearing price of $3.00/ton, down 55 cents, or more than 15%, from the program's prior quarterly sale in December 2016. The March RGGI auction saw the lowest clearing price since the December 2013 sale, which also cleared at $3.00/ton.

The RGGI comprises nine states — Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island and Vermont — that 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 in the residential, commercial and municipal sectors.

The RGGI states are undergoing a review that includes the possible tightening of the program's emissions cap, given the current oversupply of CO2 allowances in the market. The latest in a series of stakeholder meetings will be held April 20, at which time officials will discuss and review the results of reference case modeling and policy case proposals and will take comments.

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.