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Regional Greenhouse Gas Initiative RGGI allowancess trade up 33% from the $3.07 auction clearing price. Prices on the Chicago Climate Exchange traded $4.60 for Dec 09 futures contracts on October 28, 2008. These prices are flat from pre-auction pricing.
RGGI futures contracts debuted in August and have been in a $5.50 to $3.50 in price range. Initial prices started in the mid $5 range but steadily slipped as the September auction date approached. It was a “no brainer” to sell futures prior to the auction and buy physical certificates at the auction. Traders playing it right made 25% to 40% return in less than a month.
Prices dipped down to the mid $3 range in the days after the auction but have since trended slightly higher. The next auction by the RGGI States is on December 17, 2008. Previous resistance was in the mid $5 range which is where the market seems to be heading. We will see if the buyers get hurt again by bidding up the futures price. The next auction is for 31,505,898 allowances which is nearly three times the amount of first auction.
Entities can buy or sell RGGI allowances on the Flett Exchange Electronic Trading Platform. Delivery is through the RGGI COATS platform. A Flett Exchange represenative can be reached at 201-209-0234 to open an account.
Flett Exchange operates an electronic marketplace for the Regional Greenhouse Gas Initiative RGGI allowances. Flett Exchange also has voice brokers which can administer OTC trades on RGGI futures and cash trades. The Regional Greenhouse Gas Initiative RGGI is a cooperative effort of ten northeastern states to reduce CO2 emissions. Participating states have pledged to reduce greenhouse gas emissions by power generators 10% below 1990 levels by 2010.
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