WEAK RGGI AUCTION RESULTS CONFIRM REGIONAL PROGRAM
NOT THE PATH FORWARD FOR COMBATING CLIMATE CHANGE
(11/P115) TRENTON - Less than 18 percent of the CO2 allowances offered for the current compliance period and none of the allowances for the next compliance period were sold at last week's Regional Greenhouse Gas Initiative (RGGI) auction, continuing the downward trend for demand. In four of the last five quarterly auctions, not all of the allowances offered were sold; in June, less than 30% sold. The poor results confirm the Christie Administration's reasons for withdrawing New Jersey from the regional program effective December 31, 2011.
"Climate change is real and it's impacting our state, but RGGI is not the answer," said DEP Commissioner Bob Martin. "Fourteen laws enacted since the Global Warming Response Act authorized the State to join RGGI promote clean energy, provide significant market incentives for wind, solar and in-state natural gas generation, and provide broader results that benefit all ratepayers and all citizens."
The results of the September 7 auction, released on Friday, indicate that only 17.75% of the 42 million current control period CO2 allowances offered for sale regionally were sold. None of the 1.86 million future 2014 vintage CO2 allowances offered for sale regionally were sold. The clearing price for 2011 vintage CO2 allowances was $1.89, which is the reserve price. New Jersey offered for sale 5,524,735 vintage 2011 CO2 allowances and did not offer any vintage 2014 CO2 allowances. A CO2 allowance represents a limited authorization to emit one short ton of CO2 by a power plant regulated under the New Jersey CO2 Budget Trading Program or under the corresponding programs in the nine other RGGI participating states.
Before making the decision to withdraw from RGGI, the Christie Administration conducted an analysis of RGGI and found that the program has not been effective in reducing greenhouse gases and is unlikely to be effective in the future.
The cost of RGGI allowances was never high enough to change behavior and drive different choices, as it was intended to do. The cost of allowances has remained at the floor price, with no significant secondary market. At the same time, New Jersey's carbon emissions are already below the goals for 2020 established by New Jersey's Global Warming Response Act. The "Statewide Greenhouse Gas Emission Inventory for 2008" - based upon the most recent data available, and prior to the implementation of RGGI - found that the market, not RGGI, has created incentives to reduce the use of carbon-based fuels. Greenhouse gas emissions are down in New Jersey due to increased use of natural gas and decreased use of coal.
The Christie Administration has continued its commitment to combating climate change and developing clean, in-state energy sources. In June - the same month that New Jersey reached a milestone 10,000 solar arrays statewide - Governor Christie introduced a greener and more affordable vision for the use, management, and development of energy in New Jersey over the next decade and beyond. The draft Energy Master Plan establishes a path for the Administration to manage energy in a way that promotes renewable sources of energy, saves money, stimulates the economy and job creation, and protects the environment.