Global Warming Campaign News

Auction of Pollution Credits Works Effectively

Baltimore – Yesterday’s auction of emission allowances for the Regional Greenhouse Gas Initiative (RGGI) efficiently generated funding for clean energy programs from dirty sources of power.  Thirty-one million tons worth of pollution credits were sold at a price of $3.38 per ton.  This generated $106 million to be used by states to promote clean energy.

“It’s wonderful to see this landmark program going according to plan,” said Brad Heavner, state director of Environment Maryland Research & Policy Center. “Getting down to business on clean energy opportunities is the real work of fighting global warming, and the clean energy future has begun.”

Maryland has sold 5.3 million allowances in each of the first two auctions, resulting in $34 million in revenue. Of that, $18 million is from yesterday’s auction. The Maryland Energy Administration intends to use the revenue for measures that will lower costs for consumers, such as helping citizens and businesses save energy and promoting renewable energy. These measures will also help reduce the state’s global warming pollution and create jobs.

The Regional Greenhouse Gas Initiative is a collaboration of ten Northeastern and Mid-Atlantic states that have united to establish a program to limit carbon dioxide emissions from power plants to 10 percent below current levels by 2019. A key feature of the program is the allowance auction, which could result in pollution reduction of far greater than 10 percent if the money is spent effectively.

The RGGI program is the first program to auction the pollution permits, rather than give them to polluters for free based on their past emissions as has been done in other programs. All of the states participating in the program have committed to auctioning all or most of their pollution allowances. Auctions will be held quarterly, with the next one scheduled for March 18.

The allowance price of $3.38 is similar to the $3.07 price of the first auction.  It is higher than the minimum price of $1.86, but far lower than the $7 and $10 prices that would trigger corrective measures.  All of these measures show stability in the market.

“At a time of diminished state revenue, this program is a breath of fresh air,” said Heavner. “Nobody’s else budget is getting cut to provide this new money for clean energy.”

An independent market monitor for the auction, Potomac Economics, found no concerns or irregularities in the auction process or results.