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US: RGGI to auction off 18.1m allowances

07 Apr 2014 22:01:20 | edcm

The administrators of the Regional Greenhouse Gas Initiative (RGGI) will be auctioning off 18.1m allowances in June, but the US Northeastern carbon market will not offer any allowances from its cost-containment reserve (CCR) after the supply was depleted.

RGGI members recently renovated the programme by almost halving the cap, causing allowance prices to rise from $3.00/tonnes of CO2 equivalent (tCO2e) in December to the mid-$4.00/tCO2e range following the March auction ( see EDCM 7 March 2014 ).

During the March auction, which settled above $4.00/tCO2e, participants also purchased the entire 5m allowances in the cost containment reserve, which can be purchased throughout the year, meaning no additional allowances will be on offer in the final three auctions of 2014. The CCR is intended to keep prices low by offering a limited amount of additional allowances.

RGGI traders are expecting higher prices at auction as compliance entities try to hedge against future emissions and speculators become more active in the carbon market.

The auction for the 18.1m allowances will take place on 4 June. The results will be posted on 6 June. Dan X. McGraw

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