Carbon Sale Raises $40 Million

NEW YORK, Sept. 29 -- The country's first cap-and-trade auction for greenhouse gas reduction raised nearly $40 million for Northeastern states to spend on renewable energy technologies and energy-efficiency programs, officials of the Regional Greenhouse Gas Initiative, which ran the auction, said Monday.

In the absence of a federal government program to cap the amount of carbon dioxide that power plants pump out of their smokestacks, 10 Northeastern states established the initiative to set their own limits and force all fossil fuel plants to buy allowances to cover excess emissions.

The initiative is being closely watched nationally as a model for efforts to reduce emissions and stem global warming.

In the sealed online auction Thursday, energy, financial and environmental organizations paid $3.07 per ton of excess emissions, and all 12.5 million carbon allowances were sold, the initiative reported. Most of the bidders were power generators.

Maine, Vermont, Connecticut, Massachusetts, Rhode Island and Maryland participated. The other members of the initiative -- New York, New Jersey, Delaware and New Hampshire -- did not participate but plan to join in future auctions. The next quarterly auction is set for Dec. 17.

"This is a strong indication that when New York participates in our first auction in December, it will also be a success," Gov. David A. Paterson said. "I hope our bold actions here will prove to be a turning point in the fight against global climate change."

Ned Raynolds, the Northeast climate policy coordinator for the Union of Concerned Scientists, said, "This shows it's possible to put a price on polluting and the sky won't fall. What was a concept now is a reality."

Critics have said the program will not have an immediate or national effect, because the emissions cap is set too high -- at 188 million tons annually, slightly higher than the current level -- and the prices are low enough for utilities to pay the fees and continue to pollute.

But Pete Grannis, commissioner of the New York Department of Environmental Conservation, said that the cap will drop by 2.5 percent a year starting in 2015 and that a lower limit could have made it difficult to fashion an agreement among the states. "We were concerned about the impact on the utility rates," he said.

The earnings from the auction will go to the six participating states based on the number of allowances they had. Maryland will receive $16.4 million; Massachusetts, $13.3 million; Connecticut, $4.2 million; Maine, $2.7 million; Rhode Island, $1.3 million, and Vermont, $621,000, according to the initiative.

Shari T. Wilson, Maryland's environment secretary, said her state will use more than $6 million to help low-income people with utility bills and more than $7 million for energy-efficiency and conservation programs.

"We're off to a really strong start, and we couldn't be more pleased," Wilson said. "We want to make steady progress, but we want it to be a very technically and financially sound program."