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RGGI CO2 allowance prices top $4/short ton for 3rd straight time

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The Regional Greenhouse Gas Initiative (RGGI) held its 25th auction with allowance prices that were at or above $4 per short ton of carbon dioxide (CO2) for the third consecutive auction.

Allowance costs for the Sept. 3 auction were $4.88, according to the U.S. Energy Information Administration (EIA). The $4 per short ton threshold is important because in February 2013, RGGI introduced the Cost Containment Reserve (CCR), which holds allowances in reserve that are released only when the allowance price hits a predetermined amount. The predetermined amount is currently $4 and will increase in $2 increments through 2017 when it reaches $10, and then increase by 2.5 percent each following year.

RGGI held its first suction in 2008 and allowances were selling at or near the minimum allowable bid by mid-2010, where they remained for more than two years. As unanticipated decline in natural gas prices, starting as far back as 2007, that led to a decrease in CO2 emissions as natural gas replaced coal generation in the Northeast, EIA said. Starting in 2014, RGGI said it would reduce its cap on CO2 emissions by 45 percent.

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