NEWS FROM THE DELAWARE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENTAL CONTROL
Dec. 19, 2008
Vol. 38, No. 560
Contact: Philip Cherry, 739-9068; or Melinda Carl, (302) 739-9902
Delaware Expects $2.5 Million for Energy Efficiency and Renewable Energy Programs
RGGI Carbon Allowance Auction Successful
DNREC Secretary John A. Hughes today announced that Delaware will receive $2.55 million from the state’s successful participation in the Regional Greenhouse Gas Initiative (RGGI) auction of carbon dioxide (CO2) emissions allowances held Wednesday, Dec. 17. The entire 31,505,898 allowances offered by the 10 RGGI states were sold at a clearing price of $3.38 per allowance generating approximately $106.5 million for distribution among the 10 states.
Delaware offered 755,979 CO2 allowances for sale in this second RGGI auction and will receive the proceeds once all payments are made by successful bidders early next year. The revenues from the sale of RGGI allowances are dedicated to public benefit purposes as outlined in legislation passed last year by the Delaware General Assembly.
By law, auction proceeds are directed to energy efficiency and renewable energy efforts to be conducted by the new Sustainable Energy Utility (SEU) to low income weatherization and heating programs and to carbon emission abatement projects to be conducted in Delaware. Up to 10 percent of auction proceeds may be used to administer RGGI and climate change programs in DNREC.
“The success of this week’s RGGI auction demonstrates how a market-based program can address one of our most pressing environmental challenges – climate change,” said Secretary Hughes. “RGGI’s environmental co-benefits are impressive – significant and measurable reductions in greenhouse gas emissions, as well as investment funds for consumer-focused programs to help reduce long-term energy demand and costs.”
RGGI Inc. reported that 69 participants from the energy, financial and environmental sectors took part in the bidding, indicating a strong performance for RGGI CO2 allowance auctions. The demand for the allowances was “robust” at 3.5 times the available supply.
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.
RGGI intends to hold quarterly auctions during the first RGGI three-year compliance period, Jan. 1, 2009 to Dec. 31, 2011. The third auction will be held March 17, 2009.
All RGGI auctions are overseen by an independent market monitor, Potomac Economics, a leader in the field of monitoring and competitive assessment of wholesale electricity markets in the U.S. Allowance transactions are recorded on the Carbon Dioxide Allowance Tracking System (COATS) developed by Perrin Quarles Associates, which designs and builds emissions database tracking systems.
By participating in the auction, Delaware has met the commitment it made in Dec. 2005 when Governor Ruth Ann Minner joined with other Northeast governors and signed a Memorandum of Understanding. In the MOU, participating states committed to have the RGGI program in place by Jan. 1, 2009.
In July 2008, Governor Minner signed into law Senate Bill 263 that authorizes Delaware to participate in RGGI. The legislation, sponsored by Senator Harris McDowell and Representative Pam Thornburg, established the framework for Delaware’s program and authorized DNREC to adopt regulations to implement the law. On Oct. 15, 2008, Secretary Hughes approved Delaware’s RGGI regulation.
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.
