Maryland earned more than $16 million for clean energy programs in the country’s first auction of greenhouse gas emission allowances.
Six of the 10 states that formed the Regional Greenhouse Gas Initiative participated in the auction last week, earning nearly $39 million through the sale of carbon credits. More than 12.5 million credits sold for $3.07 each, RGGI Inc. said Monday.
“It’s a very tangible step to reducing greenhouse gas emissions,” said Maryland Department of the Environment Secretary Shari Wilson.
Through RGGI, the states aim to reduce carbon dioxide emissions through a cap-and-trade program. The states cap the emissions and then reduce that limit by 2.5 percent a year between 2015 and 2018.
Maryland capped the total carbon dioxide emissions at 37.5 million tons. Starting in 2009, facilities such as electricity plants that emit greenhouse gasses must purchase these allowances – one for each ton of CO2 emitted, Wilson said.
“It’s a regulation that drives the demand for these allowances,” she said.
The money raised through the auction will fund energy efficiency programs to help reduce the demand. Based on state law:
- 46 percent, or $7.5 million, will pay for energy efficiency and conservation programs
- 23 percent, $3.7 million, for residential rate relief
- 17 percent, $2.7 million, for low income energy assistance
- 10.5 percent, $1.7 million, for clean energy and climate change programs, outreach and education
- 3.5 percent, $572,000, for the administration of the fund
By all measures – such as the number of bidders and the demand for these credits – the auction was “off to a strong start,” Wilson said.
Fifty-nine participants from the energy, financial and environmental sector took part in the auction, according to RGGI Executive Director Jonathan Schrag. The demand was four times the amount of allowance available, he said.
“It went terrifically,” Schrag said.
A second auction is planned for December. Schrag said he expects more states to participate and more allowances to be for sale.
The other five states that participated are Connecticut, Maine, Massachusetts, Rhode Island and Vermont. The other states in the initiative are Delaware, New Jersey, New Hampshire and New York.
Brad Heavner, state director for advocacy group Environment Maryland, said there was some “nervousness” about the price or whether there would be bidders, but “Everything went smoothly.”
“That’s the kind of money we have been looking for.”
