The operators of the Regional Greenhouse Gas Initiative, or RGGI, announced today that all of the 12,565,387 CO2 allowances offered for sale at the first RGGI auction on September 25 have been purchased at a relatively low price of $3.07 per allowance. This is only marginally above the auction reserve price of $1.86 per allowance, and below recent prices on the Chicago Climate Futures Exchange.
RGGI did not announce the names of the winning bidders, but did note that there were 59 participants in the auction, from the “energy, financial and environmental sectors.” In total, the bidders sought to purchase more than 51 million allowances, or approximately four times as many as were offered.
The auction was administered by World Energy Solutions, Inc., and RGGI also retained an independent market monitor, Potomac Economics, to oversee the auction. Potomac Economics stated that most of the allowances were purchased by compliance entities or their affiliates. Given that RGGI seems here to stay, at least in the absence of federal cap and trade legislation, it is good to know that fears that allowances would be bought up by someone seeking either to control the market or to put fossil fuel generators out of business seem to have been laid to rest, at least for now, though we won’t really know how well RGGI is working until we see who the winning bidders are and until RGGI gets a few more auctions under its belt without incident.