CO2 allowances for utilities sold out for '09
The price of “allowances” that let New England utilities release carbon dioxide into the atmosphere is holding steady, even though the recession has reduced the amount of power being generated.
The third quarterly auction of the Regional Greenhouse Gas Initiative produced a price of $3.51 per allowance, each of which allows the release of a ton of CO2 into the atmosphere. This is slightly higher than the $3.38 price from the auction in December.
Some observers had thought the price might fall during the March 18 auction because the recession has reduced electricity demand, and therefore utilities’ need to have allowances to offset pollution.
Overall, the auction raised $117 million for efficiency, renewable energy and other programs in the 10 RGGI states, which include all of New England plus Delaware, Maryland, New Jersey and New York.
New Hampshire will receive about $4.2 million from the auction.
RGGI is the nation’s first cap-and-trade program. It aims to use market forces to encourage utilities to produce electricity in ways that don’t contribute to global warming.
President Obama has expressed interest in establishing a similar program for the nation as a whole.
All 31,513,765 of the RGGI allowances for 2009 sold. Slightly more than 2 million allowances were also sold that can’t be used until 2012. They drew a much lower price, of $3.05 per allowance.
Power companies, which will be required to own enough allowances to cover their CO2 pollution, bought 78 percent of the 2009 allowances and 93 percent of 2012 allowances.
Some utilities expressed concern when RGGI was being established that other groups, such as speculators or environmental groups, would buy up allowances and thus raise the cost for utilities.
A total of 63 groups signed up as potential bidders, including financial institutions and environmental organizations.