NEWS FROM THE DELAWARE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENTAL CONTROL

 For Immediate Release                                               

July 24, 2008; Vol. 38, No. 334                    Contact: Melinda Carl or Melanie Rapp, DNREC Public Affairs, (302) 739-9902

Regional Greenhouse Gas Initiative Auction Process Goes Live Today
60-day Bidding Process Opens for First-in-the-Nation Carbon Emissions Allowances Auction

The Regional Greenhouse Gas Initiative (RGGI) auction process goes live today, beginning 60 days of bid preparation for this first-in-the-nation auction of carbon dioxide (CO2) allowances to be held on Sept. 25, 2008.

To obtain more information about the first auction, prospective participants can log on to a conference call “webinar” today (July 24) from 2-4 p.m. EDT. All materials needed to participate in the upcoming auction and an online question window may be accessed through http://www.rggi.org/trading_auctions.htm. All auction participants must open accounts in the RGGI CO2 Allowance Tracking System; simple guidance for this procedure is available at http://www.rggi.org/tracking.htm.

Today’s Auction Notice opens the process that potential bidders must follow to qualify for and participate in the CO2 allowance auction. Governor Ruth Ann Minner joined the nine other states in urging prospective bidders to seize this first opportunity to bid for CO2 allowances by downloading final auction documents from: http://www.rggi.org/trading_auctions.htm. All potential bidders must successfully complete the qualification and approval process to participate in the auction.

The 10 Northeast and Mid-Atlantic States pioneering the auction have designed the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions in a simple and constructive way. The states have committed to cap and then reduce the amount of CO2 that power plants in their region are allowed to emit, limiting the region’s total contribution to atmospheric greenhouse gas levels. The auction will generate additional investment in energy efficiency and renewable energy in the RGGI region and fund programs to combat fuel poverty and support consumers.

Opening the auction process, RGGI’s Executive Director Jonathan Schrag said, “This first RGGI auction is a historic moment. The auctions will spur innovation in the energy sector and we anticipate strong interest from bidders. The qualification process is extremely important, so I urge potential bidders to take advantage of the information and technical assistance being made available online today.”
 
The RGGI auction process was designed with input from stakeholders and all ten participating RGGI states and will provide a platform for the auctioning of each state’s CO2 allowances.

The Sept. 25 auction will offer 12,565,387 million CO2 allowances, including CO2 allowances issued by Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont. Any CO2 allowances purchased at this auction can be used by a regulated facility for compliance in any of the RGGI states, even if that state does not offer allowances in this auction. Delaware will not have any allowances in this first auction, but expects to participate in the auction process in 2009 once the regulations are adopted.   

Under the RGGI process, after the ten participating states have stabilized power sector carbon emissions at their capped level by 2014, the cap will be reduced each year from 2015 through 2018.

By holding this auction and the one planned for December, the ten RGGI states have exceeded the commitment made in December 2005.  By signing the original Memorandum of Understanding, participating states committed to have a program in place by Jan. 1, 2009.  That goal will be met and these early auctions will ensure an ample opportunity for bidders to obtain the allowances they will need for compliance across the entire 10-state region.

Governor Minner earlier this month signed into law Senate Bill 263 that authorizes Delaware to participate in RGGI. The legislation, sponsored by Senator Harris McDowell and Representative Pam Thornburg, establishes the framework for Delaware’s program and authorizes the Department of Natural Resources and Environmental Control to adopt regulations to fully implement the law. Regulations are expected to be in place by the end of the year.

The legislation is a product of a work group established last year by Senate Concurrent Resolution 28. A majority of the workgroup members favored an approach that would require power plants to purchase 60 percent of the credits needed for the first year and increasing by eight percent annually so that in the fifth year of the program power plants would be required to purchase 100 percent of the credits they need.

NOTES TO EDITORS:

Details on the Webinar: The webinar will be held on Thursday, July 24, 2-4 p.m. EDT, and is open to anyone interested in participating in the CO2 Allowance Auction. Important details about how to participate in the auction will be covered. No questions will be taken during the webinar; however, an online question window opens the same day. The slide presentation for the webinar will be available on the RGGI.org website by 8 a.m. EDT on Thursday, July 24, 2008. To view the slides online as the presenter goes through them, log onto http://www.infiniteconferencing.com/Events/worldenergy. Select the participant option and then enter participant code 555661 and name, company, email address, and title. To hear the audio presentation, participants must dial in the following teleconference number 1.888.875.4624 and participant code 555661#.

RGGI Background: Initial CO2 allowance auctions are being held in 2008 as pre-compliance events to facilitate market price discovery and compliance planning by regulated CO2 emitters prior to the beginning of the first RGGI compliance period on January 1, 2009. A CO2 allowance represents a permit to emit one ton of CO2, as issued by a respective participating state. A power plant must hold CO2 allowances equal to its emissions to demonstrate compliance at the end of each compliance period. 

Under RGGI, the ten participating states will stabilize regional power sector CO2 emissions at their capped level through 2014, and then reduce the cap by 10 percent at a rate of 2.5 percent each year between 2015 and 2018. Regulated power plants will be able to use a CO2 allowance issued by any of the ten participating RGGI states to demonstrate compliance with an individual state CO2 Budget Trading Program. Because CO2 allowances issued by any participating state will be usable across all state programs, the ten individual state CO2 Budget Trading Programs, in aggregate, will form one regional compliance market for carbon emissions.

All participating states anticipate formal launch of their regulatory programs by the beginning of 2009. Any CO2 allowances purchased in the first auction will ultimately be usable to demonstrate compliance in any of the ten state programs. All potential market participants are eligible to participate in the first auction, even if located in a state that has yet to complete its regulatory implementation process.