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NTC EPA AND CHICAGO BOARD OF TRADE ANNOUNCED THE RESULTS OF THE SIXTH ANNUAL AUCTION OF ACID RAIN ALLOWANCES

Release Date: 03/27/98
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EPA and the Chicago Board of Trade (CBOT) have announced the results of the sixth annual auction of acid rain allowances. The auction is part of EPA’s overall program to cut the emissions that cause acid rain in half by 2010.
“The acid rain trading program is an extremely effective part of our efforts to protect public health and the environment,” said EPA Administrator Carol M. Browner. “This program has reduced acid rain emissions by 20 percent more than the law requires, and, at the same time, is cost-effective for electric utilities and American business. The Clinton Administration is now working to use trading programs in other creative ways, such as controlling smog and curbing the pollutants that contribute to climate change.”

Under this innovative system, utilities can buy and sell allowances. If sulfur dioxide (SO2) emissions from a utility are less than the permissible levels set by the Clean Air Act, the allowances can be sold to another utility as a credit. Thus far, under this incentive program, acid rain emissions nationally are 20 percent below what is required under the law.

Two electronic sealed bid auctions were held Monday in Chicago: a “spot” auction that sold allowances first useable in 1998 and a “seven-year advance” auction that sold allowances first useable in 2005. A total of 150,000 allowances was offered for sale in the spot auction, and 125,000 in the seven-year advance auction.

CBOT received 109 bids for the spot auction, of which 21 were successful; 11 bidders submitted these 21 bids. The successful bid prices ranged from $115.01 to $228.92, the average price being $116.96. All 150,000 allowances available were sold. The auction of allowances this year resulted in proceeds of $31.4 million.

CBOT received 54 bids for the seven-year advance auction, of which 20 were successful; three bidders submitted these 20 bids. The successful bid prices ranged from $108.30 to $115.01, the average price being $111.05. All 125,000 allowances available were sold. The acid rain control program, authorized by the Clean Air Act Amendments of 1990, mandates an annual reduction of 10 million tons of SO₂ emissions from 1980 levels by the year 2010.

Detailed results of this year’s allowance auction can be found on the Acid Rain Program’s home page on the Internet at https://www.epa.gov/acidrain/auctions/aucmain.html

(For further information, contact Kenon Smith, EPA/OAP/Acid Rain Division (6204J), 401 M St. S.W., Washington, D.C. 20460; phone 202-564-9164.


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