The number of market participants and volume of allowances traded in the secondary market for Regional Greenhouse Gas Initiative (RGGI) carbon dioxide (CO2) allowances increased significantly throughout the second quarter of the year, according to a report released by the states participating in the RGGI. The report finds that there is ‘no evidence of anti-competitive conduct’ and identifies increasing participation rates as a sign of ‘competitiveness and efficiency’ in the market.
‘The Report on the Secondary Market for RGGI CO2 Allowances’ was prepared by Potomac Economics for RGGI Inc. on behalf of the RGGI participating states. Key findings include the following:
– More than 30 firms had significant financial positions in RGGI futures and options contracts by the end of the second quarter of 2009, as compared to 26 at the end of the first quarter;
– Trading volumes continued to grow rapidly, as futures contract trading saw a five-fold increase from the end of the first quarter of the year; and
– Prices for RGGI futures were more stable in the second quarter of the year than in previous periods, indicating greater certainty about the value of RGGI allowances in the future.
Potomac's conclusions were based on the analysis of data reported to the Commodity Futures Trading Commission, the Chicago Climate Futures Exchange, the New York Mercantile Exchange and other data. The report is a part of Potomac's ongoing monitoring of the auction and secondary markets for CO2 allowances.