NY in auction to reduce carbon emissions

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New York state entered into the business of selling carbon dioxide emission allowances, by taking part in the Regional Greenhouse Gas Initiative’s auction on Wednesday.

New York was looking to sell more than 12 million allowances.

The 10 states participating in the initiative have designed the first market-based, mandatory cap-and-trade program in the U.S. to reduce greenhouse gas emissions. The initiative strives to do so by stabilizing power plant carbon emissions at capped levels.

Participating states will invest proceeds from carbon allowance auctions in energy efficiency programs, renewable energy projects and other programs to benefit consumers. The goal is to deliver economic and environmental benefits, and improve energy security through a reduced use of fossil fuels.

They cap the total carbon dioxide pollution a power plant can emit into the air works like this: Power plants over 25 megawatts emitting carbon dioxide must obtain a pollution allowance to do so. The allowances, available by auction, give power plants permission to emit carbon dioxide. Cumulative emissions of all carbon allowances may not exceed the amount set by the cap.

Participating states will stabilize power sector carbon dioxide emissions at the capped level through 2014. The cap will then be reduced by 2.5 percent in each of the four years from 2015 through 2018, a total reduction of 10 percent, thus bringing down carbon emission levels.

This process limits a region’s total contribution to atmospheric greenhouse gas levels.

Each sealed bid auction is held online. In a conference call following Wednesday’s auction, Public Service Commission Chairman Garry Brown said results are expected Thursday. After various reports are shared among the 10 participating states, information such as sale prices, number of units sold and who bid will be distributed Friday.

The 10 participating states offering 31.5 million allowances for sale are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.