First Control Period (2009–2011)
In the first control period, between 2009 and 2011, RGGI auctioned 395 million CO2 allowances, or 70 percent of the total 564 million available. CO2 emissions in the region fell below the cap, leaving a surplus of unsold CO2 allowances. Over the program’s first fourteen quarterly auctions, the clearing price for CO2 allowances ranged between $1.86 and $3.35, yielding $922 million in revenue. A report by the New York State Energy Research and Development Agency attributes the region’s decrease in CO2 emissions to fuel-switching from petroleum and coal to less carbon-intensive natural gas, lower electricity demand, and increased nuclear and renewable capacity.
At the end of the first control period, New Jersey Gov. Chris Christie withdrew the state from RGGI.
Second Control Period (2012–2014)
The nine remaining RGGI states continued the program, lowering the cap to account for New Jersey’s departure. Demand for allowances throughout 2012 remained low, with prices never exceeding $1.93. Demand increased dramatically, however, upon release of the updated Model Rule, which lowered the 2014 CO2 budget to 91 million tons. At the next auction, clearing prices rose as high as $3.21 and 100 percent of allowances were sold. Between 2012 and 2013, nearly 80 percent of allowances offered at auction were sold.
Changes after 2012 Program Review
Starting Jan. 1, 2014, member states began implementing the updated Model Rule adopted in late 2013. The 2014 emissions cap of 91 million tons of CO2 was set 45 percent lower than 2013, to be closer to projected emissions in 2014, and was set to decline 2.5 percent annually until 2020.
In addition to reducing the cap, the 2012 Program Review introduced several policy provisions. One of these is a Cost Containment Reserve (CCR), intended to keep the price of allowances from rising above a program-wide trigger price ($4 in 2014, $6 in 2015, $8 in 2016, $10 in 2017, and increasing 2.5 percent annually thereafter). The CCR consists of a limited supply of additional CO2 emission allowances separate from the annual RGGI Program CO2 Budget, which are to be made available for purchase when demand for allowances causes the clearing price to exceed the trigger price.