Cap-and-trade seems to be quite the moneymaker–especially when it’s mandatory.
The Regional Greenhouse Gas Initiative’s first carbon dioxide emissions allowance auction has netted approximately $38.6 million, the participating northeastern states said Monday.
The 12.6 million allowances were up for auction on September 25, and all of the allowances were sold for $3.07 per allowance, well over the $1.86 starting bid.
The money will go toward renewable energy programs and technology throughout 6 of the 10 RGGI states. States to get the funding include Connecticut, Maine, Maryland, Massachusetts, Rhode Island, and Vermont. The full list includes New Hampshire, New York, New Jersey, and Delaware.
The cap-and-trade program agreed upon by the states sets a limit to the amount of carbon dioxide each plant can emit. The plants are able to purchase allowances through the auctions up to the cap, but if they need to exceed that cap, they’ll need to “trade” with other plants who have not used up all of their permits by buying others' allowances.
The system awards plants who emit less than the cap by letting them sell their remaining allowances. The RGGI hopes the cap-and-trade program will allow the states to lower the cap by 10 percent in 10 years.
The RGGI will hold quarterly auctions, with the next one scheduled for December 17.