Maine entered RGGI in 2005 with Governor Baldacci and implemented through legislation enacted in 2007-2008 with broad bipartisan support.
Maine Department of Environmental Protection Commissioner David Littell said, “The success of our third auction shows that sophisticated market players recognize that a cap-and-trade system for greenhouse gas is working. While we see many arguments that it cannot work in the United States, these ten states have implemented a cap-and-trade system that is working well.”
In a parallel offering, the RGGI states also auctioned allowances for the second three-year control period, beginning in 2012, providing a first look at future market prices for RGGI CO2 allowances. The 2,175,513 allowances for the 2012 vintage cleared at a price of $3.05 per allowance. By the end of 2009, the RGGI states will have offered for sale 5 percent of the total supply of 2012 vintage allowances.
The auction raised $117,248,629.80 for energy efficiency, renewable energy, and other consumer benefit programs in the ten RGGI states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont).
“The states are very pleased with the results from the latest RGGI auction,” said Pete Grannis, board chair of RGGI, Inc. “Our continued success provides further support for President Obama’s position that a national cap-and-trade program with allowance auctions is the right policy for the country and the right approach for addressing the most pressing environmental and economic issue of our time: climate change.”
Potomac Economics, RGGI Inc.’s independent market monitor, observed the auction and confirmed that it was fair and consistent with auction procedures. In its “Auction Report,” Potomac found that there was “no material evidence of collusion or manipulation by bidders” and that the results were “consistent with competitive expectations.” Fifty separate entities submitted bids to purchase 2.5 times the available supply of 2009 allowances, and 20 entities submitted bids to purchase 2.3 times the available supply of 2012 allowances. A total of 42 entities won allowances for the 2009 offering in which bid prices ranged from $1.86 (the minimum bid allowed) to $10.00. Twelve bidders won allowances for the 2012 offering, in which bid prices ranged from $1.86 to $4.40.
The Auction Report, issued by the market monitor following each RGGI auction, includes data on the dispersion of bids, provides summaries of purchased allowances, allowances won by bidders, and bid prices, and, in accord with the Auction Notice for Auction 3, a list of “potential bidders” for Auction 3. Potential bidders are defined as “each applicant that has been qualified and submitted a complete Intent to Bid.” The list of 63 potential bidders demonstrates broad participation from compliance entities, financial institutions, and environmental organizations.
Compliance entities and their affiliates won 78 percent of the 2009 allowances and 93 percent of 2012 allowances. The high percentage of allowances won by compliance entities at auction continues a trend established in the two “pre-compliance” auctions held in September and December 2008, in which compliance entities won 80 percent and 85 percent of allowances, respectively.