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The results of the first auction of global warming pollution in U.S. history are in: Power plant owners are willing to pay just over $3 for every ton of carbon dioxide (CO2) they emit. More than 12 million allowances were sold for $3.07 last Thursday, bringing in $38 million for the renewable energy and energy efficiency programs of the six Northeastern states involved.
A second auction on December 17 will bring all 10 states into the Regional Greenhouse Gas Initiative (affectionately known as RGGI or "Reggie.") But already the 59 bidders in the auction—primarily energy companies but also financial speculators and environmentalists—were willing to buy four times more allowances than were actually on offer; bids came in for a total of 51,761,000 of allowances all told. (An allowance is a permit from the various state governments to emit one ton of carbon dioxide from a power plant.)
That's good news for efforts to combat climate change (and perhaps even for the economy) though it remains to be seen how well RGGI will do at bringing down emissions in the region: the cap at present is 188 million tons of CO2 per year while actual emissions were just 164 million tons last year—leaving power plant owners with room to grow their globe-warming pollution. But, since climate change is a global problem, perhaps the best thing RGGI can do is serve as a trial run for a national cap-and-trade program or carbon tax.
Credit: © Andrey Prokhorov/istockphoto.com
