The ten state regional group has collected more than $430-million in the first year of its cap-and-trade program.
States in our region have just hit a milestone in efforts to control pollution. It is a cooperative effort of 10 states in the northeast and designed to reduce greenhouse gas emissions from power plants in the region. Delaware and New Jersey are active participants, while Pennsylvania is involved, but only as an observer. The other active participants are Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.
Known as the Regional Greenhouse Gas Initiative (RGGI, pronounced like the name Reggie), the program is designed to eventually reduce carbon emissions from power plants. Once every quarter, the states hold an auction of allowances. Each allowance allows power producers to emit one ton of carbon dioxide (CO2). Phil Cherry with the Delaware Department of Natural Resources and Environmental Control says those allowances must be cashed in to the RGGI bank depending on how much a plant emits.
Cherry: If a power plant were to emit a million tons of CO2 in the course of say a year, which is about right for some of our larger power plants, they would have to have a million allowances in their bank account if you will, to surrender (cash in).
Over time, the amount of allowances made available will be reduced, which in turn should reduce the amount of emissions released in the region.
Cherry: There is a diminishing amount of allowances in the market, the price goes up, and that sends a signal then to the power plant operators that they need to reduce their emissions, that it’s getting more costly to put carbon into the atmosphere.
Delaware’s share of proceeds from the latest auction on Thursday is expected to be $1.7-million. All of the state’s 763,842 allowances were sold at a price of $2.19 per allowance. As part of the RGGI agreement, the state must use that money in programs that improve energy efficiency, benefit energy consumers and create green jobs. As a group, the RGGI has raised $432.7-million since the start of the auctions last September. Delaware has raised nearly $10-million since the start of the program.
The allowances are not exclusively sold to power plants. They’ve also been sold to financial institutions, environmental groups, and individuals. Those groups purchase the allowances as an investment, and can then sell them back to power producers on a secondary market.
The next allowance auction will be held December 2, 2009.