Date: 23-Mar-09
Country: US
Author: Timothy Gardner
NEW YORK - Ten states in the US East said on Friday they raised more than $117 million in a third auction of permits for power plants to emit the greenhouse gas carbon dioxide, about $10 million more than the last sale.
Washington is closely watching the auctions. President Barack Obama hopes to launch a cap-and-trade market on emissions of planet-warming gases and raise hundreds of billions of dollars through similar auctions starting in 2012.
The states, which formed a coalition known as the Regional Greenhouse Gas Initiative to regulate carbon emissions from power plants absent federal action, have raised a total of about $263 million since their first auction last September.
"The RGGI results, especially against the backdrop of a dismal economy, are impressive," said Jerry Kremer, chair of the New York Affordable Reliable Electricity Alliance, a group of business, labour and community groups.
Under the cap-and-trade pact, power plants must hold permits for every ton of carbon dioxide they emit. Unused permits can be sold in the market, encouraging utilities to cut emissions through efficiency or switching to cleaner fuels and technology like burning natural gas instead of coal.
Obama and leaders in Congress hope to regulate emissions through use of a market mechanism, such as cap and trade. Last month, Obama's budget proposal projected the government would raise $646 billion from 2012 to 2019 from carbon auctions that sold 100 percent of the permits.
The RGGI pact limits carbon emissions by power generators to 188 million tons per year at first, then seeks to cut them 10 percent by 2018. Some have criticized it for going too easy on polluters because it will be long on permits at first. But states have said revenues delivered to efficiency and clean energy projects will help cut emissions.
Power plants, environmentalists, and speculators who are buying believe the permits will be honored when Washington moves.
"The prices aren't going up on the laws of supply and demand, they are going up on a fair degree of belief that the credits will have value once a federal plan comes in," said Peter Shattuck, an research analyst at nonprofit group Environment Northeast.
Permits for 2009 vintage in the current RGGI auction, held on Wednesday, sold for $3.51 per ton, up 13 cents from the previous sale in December, RGGI said in an e-mail. Some 31.5 million 2009 permits sold.
Permits for 2012 vintage sold for $3.05 per ton in their initial sale, RGGI said. The auction was conducted by World Energy Solutions.
Each of the 10 states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont -- will decide where the money goes. Most of it is slated for energy efficiency, renewable energy and consumer benefit programs.
(Reporting by Timothy Gardner; Editing by David Gregorio)
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