Regional Greenhouse Gas Initiative auction prices continue to slide in June auction

Published on June 29, 2016 by Alyssa Michaud

Prices for carbon dioxide (CO2) emission allowances from the Regional Greenhouse Gas Initiative (RGGI) have continued to slip, selling for $4.53 each in the program’s 32nd auction on June 1, a decrease of approximately 14 percent since the last auction in March.

The decline in the June auction prices marks the second consecutive month in which allowance prices have fallen, now selling for 40 percent less than their previous high of $7.50 each in December, in the wake of generally consistent increases since December 2012.

RGGI currently includes nine states in its cap-and-trade program – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont – with proceeds from allowance auctions in the past two years raising an average of approximately $95.6 million for the member states. The June 1 auction raised $68.3 million, the lowest total proceeds seen in the past two years.

Experts attribute the falling allowance prices to such factors as the low price of natural gas, doubts about the future of the RGGI program and the Clean Power Plan (CPP), and an oversupply of allowances as companies work to reduce carbon emissions in anticipation of compliance with the CPP.

Sixty-four percent of allowances sold in the RGGI auction were purchased by electricity generators, while the remaining 36 percent were sold to traders and other entities.