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Following energy issues in the state of Connecticut and beyond.

Monday, June 22, 2009

Auctions Aid Clean Energy Programs


As acronyms go, the one used by the Regional Greenhouse Gas Initiative - RGGI or "Reggie" as it's known in the energy community - tends to conjure up images in my mind of Reggie Jackson, the former New York Yankee slugger.

Jackson once said that he was "the straw that stirs the drink," the player that made things happen in the Yankee lineup. The same could be said for the quarterly RGGI auctions: They are the straw that stirs Connecticut's renewable energy "cocktail".

Connecticut is one of 10 states that participate in the RGGI, a mandatory, market-based effort to reduce greenhouse gas emissions. And Gov. M. Jodi Rell announced Monday that the latest RGGI auction, which was held last week, has produced $4.7 million for Connecticut ’s clean energy and efficiency programs.

A total of $104.2 million was raised in the latest auction that Connecticut and the nine other states participating in RGGI can use for their renewable energy programs, Rell said.

Connecticut has received about $18.7 million from the four RGGI auctions held since last fall, she said. That's out of a total of $366.5 million the RGGI auctions have raised for all of the states.

Among the programs that Connecticut has used the money for are:

  • Rebates for homeowners who install solar energy systems.
  • Fuel cell production.
  • Funding to help communities and business conserve energy and reduce their dependency on traditional fuels.

“In addition to generating revenues for us, the RGGI program is showing that a ‘cap-and-trade’ program is a successful approach to reducing greenhouse gases,” Rell said.

Some are skeptical of the auctions, saying cleaning up the environment shouldn't require a complex financial market.

But it's hard to argue with the level participation in the auction.

Potomac Economics, the RGGI independent market monitor, has reported that 54 separate entities bid for 2009 auction offerings.

Here's how the RGGI auctions operate: The states work together to cut air pollution, improve energy efficiency and develop clean energy. The agreement sets a cap on the amount of carbon dioxide power plants can emit and creates a “cap-and-trade” program to allow power- generating companies and others to buy “allowances” to cover the emissions, according to Connecticut officials.

All of the 30.8 million allowances for 2009 offered in Wednesday’s auction sold at $3.23 an allowance. The RGGI also auctioned allowances for a second three-year period beginning January 1, 2012 . All of the 2.2 million allowances for 2012 sold at $2.06 per allowance, with 13 entities submitting bids to purchase 1.5 times the available supply.

The complete Market Monitor Report for Auction 4 is available at: http://www.rggi.org/docs/Auction_4_News_Release_MM_Report.pdf

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