Wednesday, March 4, 2009

Report Shows Solid Foundation for Emerging Carbon Market

A report issued today by the ten Northeast and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI) shows that the competitive process is working as intended in the secondary market for carbon dioxide (CO2) allowances. The report concludes that there is no evidence of anticompetitive conduct amongst participants, such as electric utility companies, commodity brokers, and financial speculators.

The "Report on the Secondary Market for RGGI CO2 Allowances," which addresses the period from August 2008 to January 2009, was prepared by Potomac Economics, RGGI, Inc.'s independent market monitor. Potomac's other key findings include:

• Although trading volumes remain light compared to the number of allowances sold in auctions, the average volume of allowance futures trading grew from 155,000 allowances per day in September 2008 to 330,000 per day in January 2009.

• Despite continued fluctuations in market price, overall market volatility has declined over the period of study.

• A substantial number of firms (at least 25) have participated in the trading of standard futures and options contracts on public exchanges, which is a positive sign for the competitiveness of the secondary market at this early stage. Potomac's conclusions were based on the analysis of data reported to the Commodity Futures Trading Commission, the Chicago Climate Futures Exchange and other data.The complete Report on the Secondary Market for RGGI CO2 Allowances. Contact: Emilee Pierce - 212-417-3179


About the Regional Greenhouse Gas Initiative

The 10 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. The states have committed to cap and then reduce the amount of CO2 that power plants in their region are allowed to emit, limiting the region's total contribution to atmospheric greenhouse gas levels. Under the RGGI process, the 10 participating states will stabilize power sector CO2 emissions at the capped level 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 10 states participating in RGGI are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont. RGGI, Inc. was created in September 2007 to provide technical and administrative services to the states participating in the Regional Greenhouse Gas Initiative. RGGI, Inc. is a 501(c)3 nonprofit organization.

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