isramart : Vermont earns nearly $700,000 in carbon allowance auction

Governor Jim Douglas announced today that the state will receive $684,544 from an auction of carbon allowances held this week by the Regional Greenhouse Gas Initiative. Vermont is partnered with nine other states in the RGGI, an organization that holds quarterly carbon allowance auctions with the goal of investing the proceeds into renewable energy, energy efficiency, and energy cost reduction programs. Carbon allowances represent the limited authorization for a power plant to emit one ton of CO2, as issued by a participating state and purchased through the RGGI’s cap and trade program. To date, the RGGI has auctioned a total of 1.2 million carbon allowances.

The selling price for 2009 allowances was $3.23 while 2012 futures sold for $2.06.

“RGGI is helping set the example for a federal cap-and-trade program,” the Governor said. “In Vermont, we are building a green economy and helping Vermonters save money on energy costs.”

Vermont will auction 1.2 million carbon allowances each year, and while the auction prices will fluctuate, the revenue will significantly boost the state’s energy efficiency initiatives.

A carbon allowance represents a limited authorization to emit one ton of CO2, as issued by a respective participating state. A regulated power plant must hold CO2 allowances equal to its emissions to demonstrate compliance at the end of each three-year compliance period. The first compliance period for fossil fuel-fired electric generators under the 10-state CO2 Budget Trading Programs took effect on January 1, 2009 and extends through December 31, 2011.

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 designed 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 current levels 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.