US: RGGI Q2 emissions figures down year over year

Carbon emissions declined 4% year over year during the second quarter in the Regional Greenhouse Gas Initiative (RGGI) programme, according to data from the regulator.

RGGI, which regulates power emissions from nine northeastern states, releases quarterly data 30 days after the end of the quarter. The second quarter data shows emissions declined to 18.3m tCO2e, a drop of 4% over the same period in 2014. The quarterly emissions figure is the lowest second quarter in RGGI history.

According to RGGI data, 42.6m tCO2e have been emitted in 2015, compared with 46.5m tCO2e last year. That represents an 8% drop in 2015 emissions, meaning it could soften demand from compliance entities in the programme.

A trader from a trading house said a mild start to the summer and low natural gas prices may have impacted second quarter emissions. However, the northeast is experiencing higher temperatures this week that could prompt more buying demand in the market.

Market participants said the emissions data was not impacting the secondary market that has been on a bullish run as of late. RGGI allowances have gained roughly $0.45/tCO2e since early June.

Brokers said the Dec ‘15 Vintage 2015 contract was valued at $6.04/tCO2e Friday morning. Some market participants believe the market could stay above the $6.00/tCO2e level, which if hit during the September auction could release up to 10m additional allowances.

Based on the most recent data, market participants have at least 94m allowances for compliance purposes after the settlement of the June auction. Speculators should have 76m allowances in their accounts.

Emissions data would require compliance entities to either use allowances from that bank or purchase additional allowances on the secondary market. The 42.6m tCO2e would outstrip the 30.7m allowances sold at auction. dan.mcgraw@icis.com