Published on September 5th, 2014 | by Silvio Marcacci11
U.S. Carbon Markets Just Dropped $400 Million On Clean Energy
September 5th, 2014 by Silvio Marcacci
Within the past three weeks, America’s carbon markets have invested more than $400 million into clean energy projects – as if we needed more proof of how quickly carbon markets can fund the world’s clean energy transition.
The Northeast United States’ Regional Greenhouse Gas Initiative (RGGI) announced today that its 25th carbon dioxide (CO2) allowance auction generated nearly $88 million for clean energy projects, while last month the California Air Resources Board (CARB) announced its latest cap-and-trade market auction tallied nearly $332 million.
Add them up, and America just got hundreds of millions of dollars to invest in energy efficiency, renewable energy, and consumer utility bill assistance – all while cutting greenhouse gas emissions and helping slow climate change.
RGGI Hits Six Years Of Operation
RGGI’s auction may have generated less revenue, but it’s sill significant because the event marked six years of auctions held by the program, demonstrating how successful cap-and-trade programs can be over time.
Even though carbon auction prices fell just short of RGGI’s recent high of $5.02 per allowance, set in June 2014, prices remained higher than average at $4.88 per ton and continued their recent streak of completely selling out all available allowances.
More importantly, RGGI auctions have now cumulatively generated $1.8 billion for clean energy – powering 800 megawatts (MW) of new renewables in 2013, and racing ahead of a 2013 projection RGGI could generate $2 billion by 2020.
Polluting industries and power generators now hold 80% of all CO2 allowances in circulation and overall emissions have fallen 29% since 2009, meaning the system’s working for those most affected by it without slowing economic growth. “For six years RGGI has delivered cleaner air and smarter energy use, while improving our regional economy,” said Commissioner Kelly Speakes-Backman of the Maryland Public Service Commission.
California’s Revenue Dwarfs All Others
While RGGI’s long-term success is impressive, it’s dwarfed by California’s newer but larger cap-and-trade market. CARB’s eighth auction sold out of all available 2014 and nearly all 2017 advance allowances, with 22.5 million 2014 allowances selling at $11.50 per ton and 6.4 million 2017 allowances selling for $11.34 per ton.
This means $331.8 million went directly to clean energy, emissions reductions, consumer utility bill relief, and the state budget – adding to $329 million generated in February 2014 and $140 million generated in May 2014. These totals add to the $1.4 billion generated in 2013.
California’s repeatedly ranked as America’s top clean energy economy, and with billions in cap-and-trade revenue flowing into the regional economy it’s easy to see why. But the best is likely still to come – the program is estimated to bring in a staggering $5 billion annually in 2015-2016.
Is A Global Carbon Market Taking Shape?
Individually, RGGI and California are good news. Taken together, and in the larger context of worldwide carbon market growth and interconnections, they underscore a growing movement to accurately price the external costs of carbon pollution and convert them into a decarbonized world. Add in the fact that carbon markets cut emissions 17 times cheaper than subsidies, and their value expands further.
Consider California’s existing linkage to Quebec’s carbon market, potential links to British Columbia’s carbon tax as well as burgeoning carbon pricing systems in Oregon and Washington, and potential links to Mexico and China (not to mention 50+ other markets), and the first roots of a global carbon market are taking shape.