60-day Bidding Process Opens for First-in-the-Nation Carbon Emissions Allowances Auction
AUGUSTA, ME – Jul 30 2008 – (RealEstateRama) — The Regional Greenhouse Gas Initiative (RGGI) auction process starts today with 60 days of bid preparation for the first-in-the-nation auction of carbon dioxide (CO2) allowances. Today’s notice by RGGI Inc. in New York City opens the process that potential bidders must follow to qualify for and participate in the CO2 allowance auction. The auction will be held on September 25, 2008.
RGGI, Inc. was established as a regional organization to help the ten participating states implement the RGGI program. Maine Department of Environmental Protection commissioner David Littell is vice-chair of RGGI Inc. Regarding today’s announcement, Littell said, “We have been working cooperatively as a region to develop the details of RGGI so that each state will be ready to participate in a series of auctions of allowances in a coordinated fashion. I urge prospective bidders to seize this first opportunity to bid for CO2 allowances by becoming an active participant early on in the process.”
The ten Northeast and Mid-Atlantic States pioneering the auction have designed the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions in a simple and constructive way. The states have committed to cap and then reduce the amount of CO2 that power plants in their region are allowed to emit, limiting the region’s total contribution to atmospheric greenhouse gas levels. The auction will generate investment in energy efficiency and renewable energy in the RGGI region that will support consumers and should lead to lower electric rates in the future.
Opening the process leading to the first auction, RGGI’s Executive Director Jonathan Schrag said, “This first RGGI auction is a historic moment. The auctions will spur innovation in the energy sector and we anticipate strong interest from bidders. The qualification process is extremely important, so I urge potential bidders to take advantage of the information and technical assistance being made available online today.”
The RGGI auction process will provide a platform for the auctioning of each state’s CO2 allowances. It was designed with input from stakeholders and all ten participating RGGI states. Auction documents can be downloaded from www.RGGI.org/auctions. All potential bidders must have successfully completed the qualification process to gain access to the auction.
The September 25th auction will offer 12,565,387 CO2 allowances, including CO2 allowances issued by Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont. Any CO2 allowances purchased at this auction can be used by a regulated facility for compliance in any of the RGGI states, even if that state does not offer allowances in this auction. The ten-state RGGI region has a total of 188 million allowances to sell by 2011, and Maine’s pro-rata share is about 6 million allowances. Maine is offering 872,506 allowances for the September 25th auction.
By holding this auction and another planned for December, the ten RGGI states have exceeded a commitment made in December 2005 when they signed the original RGGI Memorandum of Understanding. At the time, the participating states committed to have a program in place by January 1, 2009. That goal will be met and these early auctions will ensure an ample opportunity for bidders to obtain the allowances they will need for compliance across the entire ten-state region.
RGGI requires that fossil-fueled electrical power plants that generate more than 25 megawatts of power must have allowances for their emissions of CO2 (one allowance for each ton of CO2) by 2011, and these emissions, while initially capped, will be reduced by 10% by the year 2019. There are six power generators in Maine that fall under RGGI’s cap-and-trade requirements: the Cousin’s Island power plant in Yarmouth, Calpine’s natural gas plant in Westbrook, the Rumford power plant in Rumford, the Casco Bay natural-gas fired plant in Veazie and the two Verso paper mills in Bucksport and Jay.
Under the RGGI process, after the ten participating states have stabilized power sector carbon emissions at their capped level by 2014, the cap will be reduced each year from 2015 through 2018.
To obtain more information about the first auction, participants can log on to a conference call “webinar” today (July 24) from 2:00 – 4:00 PM EDT or submit questions online at www.RGGI.org/trading_auctions.htm. All materials needed to participate in the upcoming auction are available at the same web site. All auction participants must open accounts in the RGGI tracking system; simple guidance to this procedure is available at www.RGGI.org/tracking.htm.