[This post is published anonymously.]
One of the concerns of a corporation’s response to global warming initiatives is the political correctness of any comments. Perception is as important as content so the possibility that any critical comment could be construed as proof that a corporation is really “against” action to prevent global warming means that many critical comments are not made. Therefore, this RGGI Insider has to make this comment anonymously.
On March 20, 2009 the states participating in the Regional Greenhouse Gas Initiative announced the results of the third auction for carbon dioxide (CO2) allowances: PDF. Included in the press release for those results were the usual self-congratulatory sound quotes extolling the virtues of their program.
One of those quotes from Jonathan Schrag, Executive Director of the Regional Greenhouse Gas Initiative, Inc has policy implications relevant to the national debate for the cap and trade with full auction approach currently being debated. Mr. Schrag stated that
“The report by our market monitor ensures a high level of transparency for RGGI auctions and confirms that our contractors, especially World Energy Solutions, are doing excellent work.”
One of the criteria espoused by EPA for a successful cap and trade program (source) is a high level of transparency. However, the high level of transparency that EPA provides for its allowance trading programs far exceeds that of RGGI.
In particular, consider the results of the recent Acid Rain SO2 auction provided by EPA (source) compared to RGGI. EPA provides complete information for all bids: bidder name, amount bid and price bid. The Auction Report for the RGGI CO2 Allowance Auction 3 is available at:
PDF but it only provides a summary of bids by different categories of bidders and the closing price of the auction. EPA also provides an allowance tracking system that can be used to determine who owns how many allowances (source). The RGGI CO2 allowance tracking system (version 1.2 which was released in October 2008 only allows a user to set up an account or transfer allowances. No other information is available.
The reality is that RGGI, Inc has decided to minimize the amount of information available about the CO2 allowances and auction results. Clearly Mr. Schrag’s claim that there is a “high level of transparency” is a stretch, but the policy implication is less clear.
Considering the big picture leads this observer to one conclusion about policy implications. The general consensus is that the number of CO2 allowances available is greater than expected emissions in the first RGGI compliance period and as a result the cost of allowances should be low. However, uncertainty has a tendency to keep prices high. I can only conclude that RGGI is in reality a tax that
“raised $117,248,629.80 for energy efficiency, renewable energy and other consumer benefit programs in the ten RGGI states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont)”
and that keeping the auctions much less than “highly transparent” is a calculated decision to keep the funds raised as high as possible.