252 rggi while the initial set of rggi auctions did

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2.5.2. RGGI While the initial set of RGGI auctions did reasonably well, by September of 2010 they began terminating at the reserve price and not allocating the entire supply. In Auction 13 for instance, only about 7 million of the 42 million 2009–2011 allowances put up for auction were sold, and none of the 1 million 2012–2014 allowances were sold. This auction cleared at the reserve price of $1.89 and raised $14,150,430, which is significantly lower than the amount raised in previous auctions. Auctions 9–19 (Sept. 2010–March 2013) all cleared at roughly the reserve price, and many of them ended with a significant number of credits left unsupplied. The demand for future vintages dried up even sooner: starting in September of 2009 the auctions for future vintages were finishing at their reserve price and not allocating the entire supply. After readjusting the supply in 2013, the auction performance has improved dramatically, indicating that many of these problems were due to the supply being too high relative to the unexpectedly low demand. 2.5.3. California California sets its reserve price significantly higher than RGGI’s reserve price (at about $10). These auctions tend to end at or just a bit above the reserve price, and for the most part have allocated all of the supply of current vintages. Demand for future vintages tends to be much lower than demand for current vintages, even relative to the lower supply of future vintages. Overall, California’s markets seem to have worked better than the other markets discussed here. The price of carbon has been relatively stable, and the auctions that undersell do not undersell by very much. 2.5.4. Quebec There have been three auctions for carbon credits run by the government of Quebec. All of these auctions have ended at the reserve price, which is around $11. The first auction, run in December 2013, ended with over half the supply unallocated. The performance of these auctions will probably improve after the Quebec market is linked with California.
Pilot Auction Facility for Methane and Climate Change Mitigation Desktop Review of Environmental Auctions 7 Power Auctions LLC 2.6. Carbon Trading An important aspect, both of the allowances in these carbon markets and of the options that the PAF is proposing to sell, is their tradability. Similar to many of the issues in these carbon auctions, many of the problems in these carbon markets are due to the supply being too high. The European Union’s carbon market has been extremely volatile. Demand for the Kyoto credits (CERs and ERUs) is very low at the moment, as is demand for European Union Allowances. The CER price for instance, was about €0.14 in June of 2014. Lower demand than was projected and high supply due to unambitious caps set by the participating nations has led to the low price in this market. The American markets seem to have stabilized to some extent. The California market has performed relatively well. The price has been relatively flat at around $12. RGGI had a difficult start: the cap was set substantially too high, given the recession and the increased use of natural gas. But the market now seems to be recovering. In fact demand was high enough in the most recent auction that allowances from the CCR were added for the first time. In 2013,

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