Monday, April 13, 2009

States Initiate Bidding Process for 4th RGGI CO2 Auction

The ten Northeast and Mid-Atlantic states participatingin the Regional Greenhouse Gas Initiative (RGGI) today released the Auction Notice, Qualification Application and Intent to Bid for RGGI’s fourth carbondioxide (CO2) allowance auction, scheduled for June 17, 2009. The release initiates the bidder qualification process and publicizes auction details,including reserve price and number of allowances offered for sale.

The June auction will be the second held since compliance obligations under the 10-state RGGI CO2 Budget Trading Programs took effect on January 1, 2009and the second to offer allowances from current (2009-2011) and future (2012-2014) control periods. States will offer for sale 30,887,620 million current control period allowances (all for the 2009 vintage) and 2,172,540 million allowances for the future control period (all for the 2012 vintage).

Given the early stage of the RGGI CO2 allowance market, the Participating States (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont) will continue to use a reserveprice of $1.86 for all allowances. Before CO2 Allowance Auction 5, the Participating States will consider whether there is enough data available tojustify the calculation of a current market reserve price.

As summarized in the Auction Notice, potential bidders must successfully complete the qualification process to participate in the June CO2 allowance auction. The ten RGGI states urge prospective bidders to apply to qualify for, and participatein, the auction by downloading the auction documents from the RGGI website. Potential bidders are also encouraged to participate in a free webinar hostedfrom 2:00 PM ET to 4:00 PM ET on Wednesday, April 15, 2009. The webinar, open to all parties interested in participating in Auction 4, will review the auction format, forms that need to be submitted and the complete qualification process. Instructions to participate in the webinar.

Auction History: The June 17th auction will be the second held since compliance obligations underthe 10-state RGGI CO2 Budget Trading Programs took effect on January 1, 2009. Inaddition to the first compliance auction, held March 18, 2009, RGGI's ParticipatingStates also held two "pre-compliance" auctions in the fall of 2008. In each auction all allowances offered were sold and demand for allowances exceeded supply. Clearingprices of $3.07 in September, $3.38 in December, and $3.51 in March led the independent market monitor to describe all auctions as "robust."

The March auction was the first to offer allowances from the second three-year control period beginning in 2012. All of 2012 vintage allowances cleared at aprice of $3.05, providing a first-look at future market prices for RGGI CO2 allowances. By the end of 2009, the RGGI states will have offered for sale5% of the total supply of 2012 vintage allowances. Webinar DetailsMore information about the auction will be available through a webinar to be heldfrom 2:00 PM ET to 4:00 PM ET on Wednesday, April 15, 2009. To access the webinar audio, call the teleconference access number, (888) 875-4624and enter the participant code, 555661#. To access the webinar slides, go to theAuction Website and download them. The slides for the webinar will be posted on theAuction Website no later than 8:00 AM ET on Tuesday, April 14, 2009. [View the slides as they are presented in real time-Select the participant option and then enter participant code 555661 and the following information: name, company, email address, and title.]

About the Regional Greenhouse Gas Initiative: The 10 Northeast and Mid-Atlantic states participating in RGGI (Connecticut,Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, RhodeIsland and Vermont) have designed the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. The participating states haveregulations in place to cap and then reduce the amount of CO2 that power plants intheir region are allowed to emit, limiting the region’s total contribution to atmosphericgreenhouse gas levels. Power sector CO2 emissions are capped at current levels through2014. The cap will then be reduced by 2.5 percent in each of the four years 2015 through2018, for a total reduction of 10 percent.

A CO2 allowance represents a permit to emit one ton of CO2, as issued by a respective participating state. A regulated power plant must hold CO2 allowances equal to itsemissions to demonstrate compliance at the end of each compliance period. Because CO2 allowances issued by any participating state will be usable across all state programs,the ten individual state CO2 Budget Trading Programs, in aggregate, will form one regional compliance market for CO2 emissions.

About Regional Greenhouse Gas Initiative, Inc: RGGI, Inc. was created in September 2007 to provide technical and administrativeservices to the states participating in the Regional Greenhouse Gas Initiative. RGGI, a 501(c) 3 nonprofit organization.

No comments: