States belonging to the Regional Greenhouse Gas Initiative (RGGI) have released design elements for regional allowance auctions. The RGGI is a cooperative effort by Northeastern and Mid-Atlantic states to reduce carbon dioxide emissions.
The RGGI states have committed to reduce the amount of carbon dioxide (CO2) that certain power plants are allowed to emit, limiting the region's total contribution to atmospheric greenhouse gas (GHG) levels through a regional cap-and-trade program, whereby the participating states anticipate auctioning nearly the entire annual regional emissions budget, which initially is approximately 188 million tons of CO2. Each ton of CO2 will constitute an ‘allowance.’
The participating states have also agreed to participate in uniform regional auctions for the allowances that each state will be offering for sale. The initial auction is currently planned for Sept. 10, with a second auction on Dec. 17.
Allowances will be made available for sale on a quarterly basis in lot sizes of 1,000 allowances, a reserve price of $1.86 per allowance will apply to the first auction and unsold allowances will be made available for sale in future auctions in which a reserve price based on the current market price is being used.
Within a reasonable period of time following each auction, the participating states shall publish the auction clearing price and the total amount of allowances sold in such auction on the RGGI Web site.
