A report issued by the 10 Northeast and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI) shows that the competitive process is working as intended in the secondary market for carbon dioxide (CO2) allowances. The report concludes that there is no evidence of anti-competitive conduct amongst participants, such as electric utility companies, commodity brokers and financial speculators.
‘Report on the Secondary Market for RGGI CO2 Allowances,’ which addresses the period from August 2008 to January 2009, was prepared by Potomac Economics, RGGI's independent market monitor.
Other key findings include the following:
– Although trading volumes remain light compared to the number of allowances sold in auctions, the average volume of allowance futures trading grew from 155,000 allowances per day in September 2008 to 330,000 per day in January 2009;
– Despite continued fluctuations in market price, overall market volatility has declined over the period of study; and
– At least 25 firms have participated in the trading of standard futures and options contracts on public exchanges, which is a positive sign for the competitiveness of the secondary market at this early stage.
Potomac's conclusions were based on the analysis of data reported to the Commodity Futures Trading Commission, the Chicago Climate Futures Exchange and other data.
For more information, visit rggi.org.
SOURCE: Regional Greenhouse Gas Initiative