RGGI Auction 54 Update – Clearing price increase of 40% | Emissions Watch Blog

Published December 6, 2021 | emissions-watch

Clearing Price of $13.00/ton Marks 40% Increase

The most recent RGGI quarterly auction (Auction 54) was held on December 1, 2021. The clearing price was $13.00/ton, nearly 40 percent higher than the clearing price of $9.30/ton on September 8, 2021 (see Figure 1).  For the first time since September 2015, the Cost Containment Reserve (CCR) was triggered which is a mechanism of the RGGI program that was implemented to provide additional allowances when auction prices exceed an established price ceiling. The CCR represents a quantity of allowances (in addition to the cap), and the size of the CCR is equal to 10 percent of the total annual cap (2021 CCR; 11,976,778 allowances).

The CCR is only triggered during an auction if bid prices exceed the established price levels, which was $13.00/ton for all 2021 auctions. In this auction, 3,919,482 CCR allowances were sold, representing 33 percent of the total CCR allowances available.

Figure 1 RGGI Clearing and Reserve Prices 2018 2021 YTD

Auction 54 Specifics

Bidding interest was strong in Auction 54 and 27,041,000 allowances were sold (23,121,518 allowances offered for sale plus the 3,919,482 CCR allowances sold). Sixty-seven entities submitted bids and the quantity of allowances for which bids were submitted was 2.5 times the available supply. Fifty-three bidders secured allowances, with ten bidders purchasing 74 percent of all the available allowances. Figure 2 shows the breakdown of allowances sold to each of the successful bidders.

The Market Monitor report for Auction 54 indicated that following this auction, there were roughly 193 million allowances in circulation, with compliance and non-compliance entities holding equal positions (96.5 million allowances each). Figure 3 shows the percentage of allowances sold to compliance entities versus investors. In this auction, compliance entities purchased only slightly more allowances than investors (52 percent versus 48 percent).

Figure 2 Allowances Awarded by Bidder December 1 2021Figure 3 Percentage of RGGI Allowances Sold to Compliance Entities vs. Investors, 2020 & 2021

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Subscribers stay tuned for our forecasts and analysis on what this means for Carbon Emissions Markets moving forward, in the Q4 Emissions Watch Report.  Non-subscribers can request more information and specific price data, with ESAI’s Free Trial Service.

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