First Carbon Auction Goes Smoothly Despite Financial Crisis
Posted: (September 30, 2008 12:05 pm)

Carbon allowances sold for $3.07 per ton in the nation's first regional cap-and-trade auction, auction officials said Monday. The price was lower than futures markets had predicted but higher than the minimum price some had feared.

The Regional Greenhouse Gas Initiative auction held last Thursday sold all of the 12.6 million allowances offered in this first bidding. Power plants in 10 northeastern states will have to acquire allowances equal to 188 million tons of carbon dioxide, the "cap" set for plants' 2009 emissions in the region. RGGI will sell the allowances in quarterly auctions, until 2014, when the cap will be reduced by 2.5 percent per year.

"I'm very satisfied with the first auction," said economist Tom Tietenberg, an expert on emissions trading and a trustee of the fund set up in Maine to use the auction revenues for energy-efficiency programs.

"The initial sale was robust. The prices are reasonable. They weren't at the minimum floor price," he said by telephone. "There was a concern that many of the allowances might not be sold and people would sit on the sidelines. None of that happened."