RGGI, long-time readers may recall, is a marketplace for carbon emissions in the Northeast. It's cap-and-trade, explained more fully here. A price is determined for a set amount of carbon allowances and fossil-fuel power plants buy those allowances. Because of a big drop in emissions from participating states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont -- the total amount of allowed emissions will be reduced next year.
From The New York Times:
The regional group proposed a 45 percent reduction next year in the total carbon dioxide emissions allowed. ...
The reduction from 165 million tons is expected to raise the price of compliance, and further reductions of 2.5 percent annually were likely to increase the value of the allowances that utilities must submit for every ton of carbon dioxide, or its equivalent, that they emit.
If the proposal goes into effect, the analysis done by the group, which is a collaboration of nine states to cut carbon emissions, indicates that by 2020, allowances that are now trading at $1.93 could trade as high as $10. That would be roughly at the level where allowances for California’s new economy-wide cap-and-trade system were auctioned last fall.