Air on the Auction Block

The New Hampshire Department of Environmental Services has announced its first carbon dioxide auction. Under the ten-state Regional Greenhouse Gas Initiative (RGGI), New Hampshire will cap the amount of CO2 that can be emitted from fossil-fuel burning power plants. These plants must bid for the right to emit CO2, which will be capped at current levels on New Year's Day:

On Wednesday, December 17, between 9:00 a.m. and noon, bidders will vie for more than 31.5 million CO2 emission allowances through an online electronic platform administered for RGGI by World Energy Solutions, Inc.

At the first RGGI auction in September, 12.5 million allowances sold at a price of $3.07. New Hampshire did not participate in that auction, but will be providing 1.2 million allowances out of the 31.5 million up for sale on Wednesday.

Each allowance represents a ton of CO2 that can be released into the atmosphere. Between now and 2012, every fossil-fuel burning power plant will have to buy enough allowances to cover its emissions.

Under the September price, New Hampshire would receive about $3.6 million, which will be deposited into a Greenhouse Gas Emissions Reduction Fund, administered by the Public Utilities Commission. The Fund must pay for energy efficiency and conservation programs, with at least ten percent going to low-income residential customers to reduce their total energy use. To that end, the Legislature has already directed $1.2 million from the Fund towards the state's weatherization program, once the Fund actually has any money in it.

Wednesday's price could be higher or lower than September's. With a large drop in global energy demand since September, the price may drop sharply, meaning less money going into that Fund. But the price will be decided by the online bidders later this week, based on their insight into the global and regional energy market in 2012.

Results from Wednesday's auction will be posted by Friday at the RGGI website.