U.S. Northeast Carbon Permits Draw Record Low Price
By Simon Lomax, Bloomberg Businessweek, June 11, 2010 [here]
Carbon dioxide permits in the U.S. Northeast’s cap-and-trade program tumbled to a record low price at auction amid a surplus of the pollution rights and doubts that Congress will create a national emissions market this year.
The Regional Greenhouse Gas Initiative sold 40.7 million permits for $1.88 each, 19 cents lower than the last auction held in March and 2 cents above the minimum allowable bid, the cap-and-trade program said on its website today. Each permit in the carbon trading program for power plants from Maryland to Maine represents one ton of carbon dioxide.
Those permits come from the regional carbon trading program’s first phase, or “control period,” from 2009 to 2011. This week’s auction, held June 9 with the results withheld until today, also offered 2.14 million permits from the 2012-to-2014 control period. They went for $1.86. …
The auction price for permits peaked at $3.51 in March 2009 as Democrats in the U.S. House were preparing federal cap-and- trade legislation that would suspend the Northeastern market and convert its surplus permits into federal allowances.
Speculation that Northeastern pollution permits could be converted into federal allowances drew “financial players” such as banks and hedge funds into the Northeastern carbon market, Paul Tesoriero, director of environmental trading at Evolution Markets LLC in White Plains, New York, said in a telephone interview.
When the cap-and-trade legislation narrowly passed the House and stalled in the Senate, those “high hopes” faded and “you’re seeing the financial players not participating” in the market alongside the power plants that have to buy the carbon dioxide permits to keep running, Tesoriero said. … [more]