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(New York, NY) The ten northeastern and mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI) today released the”Post-Settlement Auction Report” of Potomac Economics, RGGI,Inc.’s independent market monitor, providing detailed results of the auction held December 17, 2008.
Potomac Economics observed the auction as it occurred and found that theauction was administered in a fair and transparent manner and in accordance withthe noticed auction procedures. As noted in its report, Potomac Economics monitored participant conduct in the auction and found “no material evidence of collusion or manipulation by bidders,” and that “the vastmajority of bids were submitted in line with competitive expectations.”
The report described the auction as “robust” with 69 separateentities submitting bids to purchase nearly 3.5 times the available supply ofallowances in the auction. The level of “liquidity contributed togenerating a clearing price that is consistent with the underlying supply and demand fundamentals governing the CO2 allowance market.” Potomac Economics indicated that “compliance entities or their affiliates, whichshould value the allowances most highly, purchased most of the allowances in the auction.”
The Potomac Economics report indicates that the auction was competitive and provides the dispersion of bids, a summary of purchased allowances, a summary of allowances won by bidder, and a summary of bid prices. As summarized in the report, compliance entities and their affiliates accounted for over 80 percentof the quantity of bids submitted in the auction, a total of 46 entities wonallowances, and bid prices ranged from $1.86 (the minimum bid allowed) to $7.20. In accord with the Auction Notice for Auction 2, Potomac Economics included inits report a list of Potential Bidders for Auction 2.
Potential bidders are defined as “each Applicant that has been qualified and submitted a complete Intent to Bid.” The list of 84 potential bidders demonstrates broad participation from compliance entities, financial institutions, and environmental organizations. “With the information released today by the market monitor, it is clear that the RGGI auctions are working well,” said Jonathan Schrag, Executive Director of the Regional Greenhouse Gas Initiative, Inc.
“The tenstates’ rules went into effect January 1, 2009, and it is reassuring to see that the auctions are running smoothly and that the majority of allowances have been purchased by the compliance entities which need them.”
The complete Post-Settlement Auction Report for the RGGI CO2 Allowance Auction2 is available at: http://www.rggi.org/news/releases
In the second “pre-compliance” auction, all of the 31,505,898 allowances offered for sale on December 17, 2008, were sold at a clearing priceof $3.38 per allowance. The demand for the allowances was strong with a total quantity of 108,709,000 allowances demanded, which was almost 3.5 times the available supply for this second auction. The auction raised 106.5 milliondollars for use by the ten RGGI states. These states will invest auction funds in energy efficiency and renewable energy technologies, as well as otherprograms to benefit energy consumers.
In the first “pre-compliance” auction, all of the 12,565,387 allowances offered for sale on September 25, 2008 were sold at a clearing priceof $ 3.07 per allowance. The auction raised 38.6 million dollars for use by thesix RGGI states that offered allowances for sale during that first auction. About the Regional Greenhouse Gas Initiative The 10 northeastern and mid-Atlantic states participating in RGGI have designedthe first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. The states have committed to cap and then reduce the amount of CO2 that power plants in their region are allowed to emit, limiting the region’s total contribution to atmospheric greenhouse gas levels.
Under the RGGI process, the 10 participating states will stabilize power sector CO2 emissions at the capped level through 2014. The cap will then be reduced by 2.5 percent in each of the four years 2015 through 2018, for a total reduction of 10 percent. The 10 states participating in RGGI are Connecticut, Delaware, Maine, Maryland,Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.For more information about RGGI, turn to: http://www.rggi.org
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