RGGI auction

Follow-up to today's earlier FR post, Reuters reports RGGI's first auction of permits allowing power plants to emit a greenhouse gas "raised nearly $39 million."

The auction kicked off the Regional Greenhouse Gas Initiative, an agreement by ten states to begin regulating carbon dioxide emissions from more than 230 power plants in January. The states, from Maryland to Maine, are taking action in the absence of guidance from the Bush Administration on how to regulate the gases widely blamed for warming the planet.

RGGI's website reports, "All allowances offered in Auction 1 were sold at a clearing price of $3.07." The RGGI states plan to use the money to protect consumers from higher costs resulting from the emissions cap.

Where Feds fear to tread

The Regional Greenhouse Gas Initiative (RGGI) is a Northeast and Mid-Atlantic states initiative which puts limits on carbon dioxide emissions from 233 utilities, making them pay for each ton of pollutants. RGGI is the first mandatory cap-and-trade program in the US. According to a Sept 16 story in the New York Times, the ten states cooperating in this effort:

will set their own limits, with each issuing tradable permits, or allowances, for carbon pollution. On Sept. 25, utilities will start bidding at auction for allowances, which they can later sell - mimicking the so-called cap-and-trade programs that effectively reduced acid rain in the 1990s.

RGGI's factsheet (pdf, 75kB) claims four main goals:

• Reduce CO2 emissions - The cap on emissions of CO2 from power plants in the RGGI region will be 10 percent lower by 2018 than at the start of the RGGI program in 2009.
• Support a green economy - The ten states will use revenues from CO2 allowance auctions to boost investment for energy efficiency and renewables.
• Promote energy independence - Participating states should be able to invest 50 percent more per capita for helping consumers use energy efficiently.
• Provide a model for a national program to reduce CO2 emissions - RGGI demonstrates that a national program to reduce CO2 emissions can benefit both the environment and the economy.

Auction results should be made available at 9:00 a.m. on Monday, September 29, 2008.

Visit, Regional Greenhouse Gas Initiative