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March 16, 2010
Seventh Auction of Carbon Allowances by the Regional Greenhouse Gas Initiative Yields $88 Million for Clean Energy Investment
    by Robert Kropp

As doubts about passage of federal cap-and-trade legislation grow, total proceeds from Regional Greenhouse Gas Initiative auctions increase to more than $582 million.


Although a provision for a cap-and-trade program was included in the Waxman-Markey climate legislation that passed the House of Representatives last June, it appears unlikely that such a program will be included in whatever climate legislation eventually passes the Senate. Even President Obama, an advocate for cap-and-trade, acknowledged as much last month, while saying, "The concept of incentivizing clean energy so that it's the cheaper, more effective kind of energy is one that is proven to work and is actually a market-based approach."

One such market-based initiative that has been operating in the US since 2003 is the Regional Greenhouse Gas Initiative (RGGI), a cooperative effort to limit greenhouse gas (GHG) emissions involving ten states in the Northeast and Mid-Atlantic. While the emissions reduction targets established by RGGI are modest—they require a ten percent decrease in emissions by 2018, compared to a 17% reduction by 2020 included in Waxman-Markey—and despite the fact that the initiative covers only producers of electric power, the allowances issued by participating states in the seven quarterly auctions held thus far have raised more than $582 million.

The RGGI auctions all of its allowances, as opposed to the House bill, which proposed to give 85% of them away for free.

Proceeds from the RGGI auctions are distributed among participating states, which invest them to improve energy efficiency and accelerate the deployment of renewable energy technologies. Programs in which states invest include energy efficiency and jobs training.

"Expanded efficiency programs, funded in part by RGGI, are expected to create or maintain nearly 4,000 jobs in Massachusetts over three years," said Phil Giudice, Commissioner of the Massachusetts Department of Energy Resources.

The most recent RGGI auction, held on March 10th, yielded almost $88 million for clean energy investment. The more than 40 million emissions allowances offered at the auction sold at a price of $2.07 each.

According to RGGI, its CO2 Allowance Tracking System (RGGI COATS) "facilitates market participation by enabling the allocation, award, and transfer of CO2 allowances, the registration of offset projects, and the submittal of offset project...reports."

Recognizing that the energy-only legislation most likely to be passed by the Senate will fail to drive the investment needed for a transition to a low-carbon economy, many states are expected to enact cap-and-trade programs of their own. One such program already in place is the Western Climate Initiative (WCI), a collaboration of seven US governors and four Canadian Premiers.

Even as the Senate prolongs its deliberations, and opponents of meaningful legislation invoke scientifically untenable skepticism regarding climate change, a new poll from the Pew Research Center for the People & the Press indicates that most respondents support a cap-and-trade program. According to the poll, "A majority (52%) of Americans favor setting limits on carbon dioxide emissions and making companies pay for their emissions, even if it may mean higher energy prices."

 

 
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