RGGI Prices Climb As States Institute Tighter Carbon Cap

Mar 7, 2014

While the blue line is price, the red line is demand (how many bids vs. how much available supply)
Credit RGGI Inc / NHPR

The  price power plants will pay to emit a ton of carbon reached a new high in the latest Regional Greenhouse Gas Initiative auction.

This quarter, it cost $4 to buy the right to emit a ton of carbon dioxide; previously, the highest price was $3.51, set in 2009.

In total New England power plant operators spent nearly $94 million to comply with  RGGI, funds which most states reinvest into energy efficiency programs.

The rising price is the result of a lower cap on carbon dioxide that the New England States enacted last year, and which took effect this auction.

After an economic recession, a historic switch to natural gas for electric generation, and ramped up spending on efficiency, New England was way ahead of its emissions target.

In response RGGI states ratcheted down the carbon cap by 45%.

Reaching the $4 dollar mark triggered the release of 5 million additional carbon allowances for sale, helping to keep the price from spiking too high.