US: RGGI to auction off 15.4m allowances

The Regional Greenhouse Gas Initiative (RGGI) will auction off 15.4m allowances during its December auction.

RGGI, which regulates power emissions from nine northeastern states, will auction off 15.4m allowances on 2 December. No cost-containment allowances will be available since all 10m allowances were sold during the September auction.

The results would be released at 10:00 eastern time on 4 December.

RGGI allowances have surged on the secondary market after the September auction cleared at $6.02/tCO2e and all 10m CCR allowances were sold. RGGI allowances were valued $6.67/tCO2e, or a roughly 10% increase over the auction clearing price, according the Intercontinental Exchange.

Market participants said it is too early to determine how the final auction of the year would settle. Multiple traders and brokers have said the market could inch closer to $7.00/tCO2e by the end of the year.

After the third auction, the market has an estimated 194.4m allowances in circulation and nearly 210m should be in circulation at the end of the year. If emissions are flat in 2015, the market would have 125m allowances banked for future needs.

Some brokers are anticipating the oversupply to be even larger.

RGGI compliance entities will have to be holding allowances to cover 50% of their compliance obligation on 1 March, meaning the December auction would be one of the last opportunities to buy allowances. dan.mcgraw@icis.com