September 11, 2009

Fifth RGGI Auction Expected to Yield $1.78 million to Help Delaware’s Economy and Protect the Environment

DOVER – Governor Jack Markell and DNREC Secretary Collin O’Mara announced today that Delaware expects to receive $1.78 million for investment in clean energy projects from the state’s participation in the fifth regional auction of carbon dioxide (CO2) allowances Wednesday, Sept. 9.  The auction marks the one year anniversary of the Regional Greenhouse Gas Initiative (RGGI) auctions and brings the total amount of proceeds to more than $432.7 million since September of 2008.
 
CO2  is a greenhouse gas that contributes to global warming. The 10 RGGI partnering states hold quarterly allowance auctions and invest the proceeds in energy efficiency, renewable energy and other programs that benefit energy consumers and create green jobs.
 
“This funding will create jobs to help our economy and pay for programs to help our environment,” Markell said.
 
All of Delaware’s 763,842 allowances offered for sale in this auction were sold at a clearing price of $2.19 per allowance.  In a parallel offering, Delaware sold 66,698 allowances for the 2012 vintage for $1.67 per allowance.  The 2012 vintage offering provides power plants and other entities that must comply with Delaware regulations the first look at future market prices for RGGI (CO2) allowances.
 
“RGGI auction proceeds can boost Delaware’s leadership in transitioning to a green economy by fostering investments in clean energy sources and green jobs,” said Secretary O’Mara.
 
Under legislation passed last year by the Delaware General Assembly, approximately $1.16 million or 65 percent of the auction proceeds will be directed to the new Sustainable Energy Utility, the non-profit entity tasked to provide energy efficiency and renewable energy programs for households and businesses. The SEU’s new program, Energize Delaware, has begun to offer rebates on certain Energy Star appliances using RGGI proceeds from previous auctions.
 
A total 15 percent of auction proceeds will be directed to low income consumers through programs administered by the Department of Health and Social Services. Up to 10 percent will be used for greenhouse gas reduction projects and the remaining 10 percent may be used to administer RGGI and climate change programs in DNREC.
 
Delaware is one of ten Northeast states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont) pioneering RGGI – the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions.
 
The participating states adopted regulations to cap and then reduce the amount of CO2 that power plants in each state are allowed to emit, limiting the region’s total contribution of atmospheric greenhouse gas levels. Under RGGI, the 10 states will stabilize power sector carbon emissions at their capped level, and then reduce the cap by 10 percent at a rate of 2.5 percent each year between 2015 and 2018. The groundbreaking program may serve as a model for a possible federal cap-and-trade program.
 
Since last September, over 100 bidders, including electric utilities, manufacturers, financial institutions, environmental groups and individuals have participated in the RGGI auctions for CO2 allowances. Every major power plant in the 10-state RGGI region now reports quarterly CO2 emissions to the public in an emissions and allowance tracking system.
 
A CO2 allowance represents a limited authorization to emit one ton of CO2 emissions to demonstrate compliance at the end of each 3-year control period. The first control period for fossil fuel-fired electric generators under each state’s CO2 Budget Trading Program took effect on January 1, 2009 and extends through Dec. 31, 2011.
 
The sixth auction will be held Dec. 2, 2009.
 
For more information on Delaware’s RGGI program, visit http://www.awm.delaware.gov/AQM/Pages/RegionalGreenhouseGasInitiative.aspx or for RGGI, Inc., visit http://www.rggi.org.