State to receive $684,554 in CO2 "cap-and-trade"

Gov. Jim Douglas announced that Vermont will receive $684,554 as its share from this week's fourth quarterly auction of carbon allowances by the Regional Greenhouse Gas Initiative.

The selling price for 2009 allowances was $3.23 while 2012 futures sold for $2.06.

"RGGI is helping set the example for a federal cap-and-trade program," the governor said. "In Vermont, we are building a green economy and helping Vermonters save money on energy costs."

The 10 partnering states in RGGI hold quarterly allowance auctions and invest the proceeds in energy efficiency, renewable energy and other programs that benefit electricity consumers and create green jobs.

The states have now auctioned a total of 110 million allowances for a total of $366.5 million since the first RGGI auction in September. The states are investing the proceeds in consumer benefits in four key program areas: energy efficiency, renewable energy, technology development, and energy cost reduction programs. Overall, the states have invested the vast majority of funds in energy efficiency and renewable energy.

Vermont will auction 1.2 million carbon allowances each year, and while the auction prices will fluctuate, the revenue will significantly boost the state's energy efficiency initiatives.

A carbon allowance represents a limited authorization to emit one ton of CO2, as issued by a respective participating state. A regulated power plant must hold CO2 allowances equal to its emissions to demonstrate compliance at the end of each three-year compliance period. The first compliance period for fossil fuel-fired electric generators under the 10-state CO2 Budget Trading Programs took effect on Jan. 1, 2009 and extends through Dec. 31, 2011.

The 10 Northeast and Mid-Atlantic states participating in RGGI (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont) have designed the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. Power sector CO2 emissions are capped at current levels through 2014. The cap will then be reduced by 2.5 percent in each of the four years 2015 through 2018, for a total reduction of 10 percent.

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