Tuesday, December 16, 2008

RGGI To Hold Second Auction

What: On behalf of the participating states, the Regional Greenhouse Gas Initiative, Inc. will conduct the second auction under the Regional Greenhouse Gas Initiative (RGGI). Bidders will vie for more than 31.5 million carbon dioxide emissions allowances.

When: Wednesday, December 17, 2008 between 9:00 am and noon eastern standard time

Where: Each of the sealed bid RGGI auctions are held on-line through an electronic platform provided by World Energy Services.

Background: RGGI will reduce carbon dioxide (CO2) emissions through a mandatory,
market-based cap-and-trade program. Under RGGI, the ten participating states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont) will stabilize power sector carbon emissions at their capped level, and then reduce the cap by 10 percent at a rate of 2.5 percent each year between 2015 and 2018.

CO2 allowances under RGGI will be distributed primarily via auctions rather than the free allocation methodology used in other emissions markets. By using an auction, participating states are able to provide benefits to consumers through strategic investment of auction proceeds

Proceeds from the carbon allowance auctions will be invested by the participating states in energy efficiency programs, renewable energy stimulus efforts and other programs to benefit consumers. As a result, RGGI will deliver economic and environmental benefits and improve energy security through reduced use of fossil fuels.

The first RGGI auction was held Sept. 25 during which more than 12.5 million allowances from 6 states were sold. Wednesday's auction, the second of two RGGI auctions held during the pre-compliance period, will offer 31,505,898 allowances, including CO2 allowances from all ten participating states. These two auctions are termed "pre-compliance" auctions because actual compliance obligations under the programs do not take effect until January 1, 2009.

The CO2 allowances purchased at this auction can be used by a regulated power plant for compliance in any of the RGGI states. Sales of CO2 allowances will be through a consistent offering of allowances in quarterly auctions. States have committed to offer for sale before the end of 2011 all of the allowances they are putting into the auctions for the first three-year compliance period. Regulated power companies must hold enough allowances to match their CO2 emissions for the first compliance period by March 1, 2012.

After the auction closes, the auction administrator will determine winning bids and the market monitor will prepare a report on conduct of the auction and fairness of market participation. Following approval of the auction results by the participating states, RGGI, Inc. will issue a news release with the clearing price, volume of allowances sold and the market monitor's assessment. Results are expected on Friday, December 19th and will be posted at RGGI. After financial settlement and award of allowances in early January, further information about the auction results will be provided on the RGGI website.

For more information on RGGI auctions see: http://www.rggi.org/co2-auctions

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