FOR IMMEDIATE RELEASE:
September 29, 2008
GOVERNOR PATERSON HAILS NATION’S FIRST GLOBAL WARMING CAP AND TRADE AUCTION A SUCCESS
Demand Runs High for First-in-the-Nation Carbon Dioxide Emissions Auction
Nearly $40 Million Generated for Clean Energy Technologies in Six Northeastern and Mid-Atlantic States
Governor David A. Paterson today heralded the first auction for the Regional Greenhouse Gas Initiative (RGGI) as a success, setting an example for other states and the nation to follow. Governor Paterson opened the nation’s first-ever auction of carbon dioxide allowances when he and New Jersey Governor Jon S. Corzine rang the ceremonial bell at the New York Mercantile Exchange in Manhattan on Thursday, launching the nation’s most serious initiative yet to reduce emissions of greenhouse gases. All of the 12.6 million allowances offered on September 25th were sold at a clearing price of $3.07 per allowance, generating nearly $40 million of funding for investment in energy efficiency, clean and renewable energy technologies and strategies that reduce carbon dioxide.
“The result of this auction sends a clear signal that supporting investment in improved energy efficiency and clean and renewable energy technologies is prudent and fiscally sound. Demand was high and fears of low-ball bidding did not come to pass. Instead, RGGI has used market forces to set a price on carbon,” said Governor Paterson. “This is a strong indication that when New York participates in our first auction in December, it will also be a success. I hope our bold actions here will prove to be a turning point in the fight against global climate change.”
There were 59 entities from the energy, financial and environmental sectors bidding in the auction, indicating a robust interest in the first of many carbon dioxide allowance auctions. They sought 51.8 million allowances - four times the available supply for this first auction. Total revenue from the auction was $38.6 million, which will be distributed to the six RGGI states that offered allowances for sale during the first auction - Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont.
New York State is on track to participate in the next quarterly allowance auction. The regulations promulgated by the Department of Environmental Conservation and the New York State Energy Research and Development Authority (NYSERDA) will be final next week. New York State will offer about 13.1 million tons for an auction expected to be held on December 17, 2008. Based on the September results, New York could realize approximately $40 million in proceeds. Proceeds from the auction will go toward energy efficiency, alternative energy generation technologies, clean and renewable energy and other initiatives in each of the ten participating states: New York, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island and Vermont.
By putting a price on carbon dioxide pollution through the RGGI auction, power plants will now have a financial incentive to reduce pollution.
Pete Grannis, New York State Commissioner of Environmental Conservation and Chair of the Regional Greenhouse Gas Initiative, Inc., said: “The ten RGGI states have demonstrated great leadership in coming together to offer this first carbon cap-and-trade system, and the smooth completion of the initial auction is proof that the RGGI is leading the nation in the battle against climate change. RGGI’s example shows that an open and competitive carbon market can be implemented.”
Garry Brown, Chairman of the New York State Public Service Commission, said: “We are pleased with the successful achievement of this initial auction and the signal it sends about the ability of states to collaborate. I applaud Governor Paterson on his efforts to marshal the State’s resources to combat the threat of global warming and reduce the effects of greenhouse gases.”
Vice President for Programs for NYSERDA, Bob Callender, said: “The success of the auction is a testament to the collaborative efforts of the states that comprise RGGI. Governor Paterson has made fighting global climate change one of the hallmarks of his administration and we look forward to working with our partners to develop and implement the programs that will reduce the emissions of greenhouse gases in New York State.”
About the Regional Greenhouse Gas Initiative
The ten Northeast and Mid-Atlantic states participating in RGGI have designed the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. Under RGGI, these ten states have established a cap or limit on the total amount of carbon dioxide pollution that power plants can emit into the air. Power plants over 25 megawatts that emit carbon dioxide must obtain pollution allowances to do so. These allowances, which are available by auction, give the power plants permission to emit carbon dioxide. The cumulative emissions of all carbon allowances may not exceed the amount set by the cap. Over time, the carbon cap is lowered incrementally, thus bringing down carbon emission levels. Participating states will stabilize power sector carbon dioxide emissions at the capped level through 2014. The cap will then be reduced by 2.5 percent in each of the four years from 2015 through 2018, for a total reduction of 10 percent. This approach will limit the region’s total contribution to atmospheric greenhouse gas levels.
For more information about RGGI, visit: http://www.rggi.org.