RGGI Auction Yields $48.2 Million for Investment in Energy Savings and Clean Energy

New York, NY (December 3, 2010)- The states participating in the Regional Greenhouse Gas Initiative (RGGI) today released the results of their 10th regional auction of carbon dioxide (CO2) allowances, held Wednesday, December 1st. As with previous auctions, states are re-investing the proceeds from Wednesday’s auction in a wide variety of strategic energy programs to save consumers money, benefit the environment and build the clean-energy economies of the RGGI states.

The 10 Northeast and Mid-Atlantic states participating in RGGI (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont) have implemented the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. Power sector CO2 emissions are capped at 188 million short tons per year through 2014. The cap will then be reduced by 2.5 percent in each of the four years 2015 through 2018, for a total reduction of 10 percent.
The offering of current control period CO2 allowances (2009-2011) in the auction yielded a total of $46,044,300 from the sale of 24,755,000 allowances. Fifty-seven percent of allowances offered for sale were sold. The auction clearing price was $1.86 per allowance, the minimum reserve price for the auction. Thirty-eight entities submitted winning bids, with bids ranging from $1.86 to $10.02. Electric generators and their corporate affiliates purchased 97 percent of the total number of current control period allowances sold.
States also offered a smaller number of CO2 allowances for a future control period (2012-2014). The offering of future control period allowances yielded a total of $2,179,920 from the sale of 1,172,000 allowances. Fifty-five percent of allowances offered for sale were sold. The auction clearing price was $1.86 per allowance. Four bidders submitted winning bids, with bids ranging from $1.86 to $2.01. Electric generators and their corporate affiliates purchased 100 percent of the total number of future control period allowances sold.
“With each successful auction, RGGI shows that market-based climate protection programs work and can boost our economy with funds to help our businesses become more efficient, support job growth, and lower our electric bills,” said David Littell, a Commissioner of the Maine Public Utilities Commission and Chair of the Regional Greenhouse Gas Initiative, Inc. Board of Directors. “RGGI continues to set the example of successful regional climate change innovations.” Proceeds from the RGGI auctions now total more than $777.5 million, over 80 percent of which is being re-invested by states in strategic energy programs. While programs vary, overall, states are investing the majority of proceeds to realize energy savings in homes and businesses.
For example, New York State is investing a portion of its CO2 allowance proceeds to provide energy efficiency services to residential consumers across the state. Households that participate in the EmPower New York program, which incentivizes energy education, energy audits and on-the-spot energy efficiency upgrades in oil-heated low-income households, save an average of 125 gallons of oil and realize approximately $500 in total energy bill savings annually. Caroline and Arthur Holmwood of Greenfield Center, New York, saw their energy bill decline by 50 percent after receiving a new boiler and improved insulation through EmPower New York. “Over the summer our electric bill was cut in half compared to the year before, and we expect savings during the heating season as well from our new boiler. It’s 97 percent efficient,” Mrs. Holmwood said.
In Maine, a portion of RGGI proceeds are invested to improve energy efficiency in industrial facilities. Madison Paper Industries (MPI), a paper company with more than 240 employees, was just one of 19 companies to receive a RGGI-funded grant from Efficiency Maine’s Large Projects Grant Program. The company is using the $1 million grant to install new heat exchangers to capture heat from its wastewater and papermaking process. According to Joe Clark, MPI’s reliability engineer, the project will result in energy savings of more than $2 million per year – enough to support the retention of 18 jobs. “These savings will help secure the future of an established paper mill facing difficult economic pressures,” he said. “Without the grant funds, we would not have been able to pursue these projects in the current business climate.”
In New Hampshire, RGGI proceeds support the Greenhouse Gas Emissions Reduction Fund (GHGERF), which provides grants for a wide variety of energy efficiency projects in residential, commercial and municipal sectors. Crotched Mountain Rehabilitation Center, a New Hampshire-based charitable organization which provides education, rehabilitation and residential support services to more than 2,000 individuals per year, is just one organization to benefit from the program. Using a $176,531 grant from the GHGERF, the center connected a 12,800 square foot mixed-use building to a state-of-the art central district heating system that uses wood chips harvested locally from New Hampshire forests. As a result, the building now requires the equivalent of 6,000 gallons of heating oil per year, down from 25,000 gallons prior to the retrofit, saving 280 tons of CO2 emissions annually. “Our residents now enjoy comfortable, regulated heat, from an efficient system fueled by wood from a nearby family-run business,” said Ray Sebold, project manager at Crotched Mountain. “As the largest employer in the area, with more than 800 employees, keeping our costs low is a top priority. The RGGI grant is enabling us to save resources and cut costs while also supporting a local business with sustainable fuel purchases.”
In Connecticut, RGGI proceeds are supporting a variety of energy efficiency programs, including the Small Business Energy Advantage Program (SBEA), a program that enables small business owners to control their energy budgets. In 2009, the program serviced more than 1,300 businesses, saving them a collective total of more than $5 million per year. Bishop Orchards Farm market, a family-run market in Guilford, Connecticut, was just one business to benefit from the program. Last year, the market received a complete interior lighting upgrade as well as incentives for large-scale efficiency measures, including the installation of night covers for open coolers and efficient motors for refrigerated units. “SBEA has given us the tools to reduce our energy use, save resources and keep our costs stable,” said Keith Bishop, the market’s President and CEO. “We would not have been able to do this large project without the financial incentives from the SBEA program.”

Related Resources:

RGGI Auction Yields $48.2 Million for Investment in Energy Savings and Clean Energy
Regional Greenhouse Gas Initiative (RGGI)
Tapping Carbon Markets for Urban Forests