Solid start for Reggie

The Regional Greenhouse Gas Initiative – a statutory cap-and-trade programme covering power stations in 10 north-eastern US states – published the results of its first auction today (a few forward trades have been happening over the summer).

The clearing price was $3.07 – well above the $1.86 floor – suggesting that participants feel the scheme will cut emissions in 2009 (the year the credits will be used in). Environmentalists are quick to point out that RGGI actually allows a 5% increase in emissions from 2008 and credits have come out at $3 because the allowed increase is likely to be smaller than the desired (or baseline) increase.

RGGI is great. It’s the first statutory cap on GHGs in the US. At this stage it is miniscule (Thursday’s auction revenue was about $39m – compare the current value of phase 2 EUAs allocated in 2008: EUR 52bn) and it has to ramp up quickly to be a meaningful part of climate policy. Getting the infrastructure in place is important – but with a non-trade exposed industry like power generation there is every reason for stringent 2010 cap.

(At $3 at least we don’t have to worry too much about the offsets that will be allowed into RGGI…)

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2 Responses to “Solid start for Reggie”

  1. Dan,
    Keiser Homes is a modular home manufacturer located in Maine. We will be running an incentive this winter that will give away free Energy Star construction features (such as Dense Pack Cellulose insulation in exterior walls). I’m interested in determining if we would be able to sell carbon offsets based on the resulting decreases in energy used to heat these homes (generally a 30-40% reduction when compared to the average home based on the HERS index). I know we can’t do do if the customer pays for the upgrades, but where can I find out more about if these “offsets” are saleable to RGGI or otherwise (Connecticutt?) and, if so, how to go about doing so?

    Thanks,
    Josh Saunders
    Keiser Homes

  2. Hi Josh
    I’d take a look at the ‘voluntary’ market, where the buyers are people & companies who buy to be socially responsible. There are a range of standards out there that you can look through and see if your project meets them. I don’t think you’d be eligible for RGGI (it allows five project types: * End-use energy efficiency improvements; * Converting non-forested land to forested land; * Landfill gas capture; * Agricultural methane capture; and * Reducing sulfur hexafluoride from electric transmission and distribution) but if you have a properly additional project you might be able to find more money anyway. Try the Voluntary Carbon Standard for a starter.
    Dan

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