The Regional Greenhouse Gas Initiative (RGGI) announced that all 12.5 million carbon permits were sold at its first cap-and-trade auction. Fifty-nine participants from the energy, financial and environmental sectors took part in the bidding. The permits were each sold at a clearing price of $3.07, the minimum bidding price was $1.86.
“RGGI’s example shows that an open and competitive carbon market can be implemented,” said RGGI’s Chair, Pete Grannis, in a statement.
The auction generated about $ 38.6 million in proceeds, which will be distributed to the six RGGI states — Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont — that offered allowances for sale during the first auction. The states are investing the funds in energy efficiency and renewable energy technologies and programs to benefit energy consumers.
Contrary to expert predictions that demand may be low, RGGI reported that demand for the permits were four times the available supply at the auction.
The RGGI auction was administered by World Energy Solutions Inc. RGGI intends to hold quarterly auctions during the first RGGI three-year compliance period from Jan. 1, 2009 to Dec. 31, 2011. The next auction is set for Dec. 17, 2008.
The sold-out auction is a good sign for the Western Climate Initiative, which recently unveiled a draft of its 2012 cap-and-trade program.