The third auction under North America’s first mandatory emissions cap and trade scheme has seen 31.5 million permits sold at a clearing price of $3.51 each. The Regional Greenhouse Gas Initiative (RGGI) sees Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont combining to cap emissions from power stations over the next decade.

The auction result was 20 to 25 cents lower than the prevailing price in secondary market trading before the auction, but the auction result saw secondary trade little changed. On March 20, RGGI Dec 09 emission permits finished the week at $3.70 on the carbon exchanges. Prices for later delivery dates ranging up to $3.89 for Dec 11s, the end of the first trading phase of the scheme.

The latest auction price is up from $3.38 in December and $3.07 back in the first auction last September. In the latest auction, the RGGI states also sold the first allowances for the second three-year trading phase beginning in 2012. The 2.2 million 2012 vintage allowances cleared at a price of $3.05 per allowance.

The rising prices come in the face of a fundamental oversupply of permits for the RGGI market. Bloomberg reports research from analysts Environment Northeast suggesting that emissions last year from power stations covered by the scheme were 19 per cent below the cap set for this year, the first year of the scheme. While there has been some switch to renewable energy and gas away from coal, the recession and mild weather has seen power consumption fall.

New Carbon Finance says current healthy activity in carbon markets in the US stems from under the Obama administration’s move toward a national cap and trade system. A number of firms are weighing into voluntary markets in anticipation of receiving credit under such a future scheme for early action to cut emissions now.

Josh Margolis, co-CEO of brokers CantorCO2e, described a similar situation in the mandatory RGGI market. “The price surge suggests that early actors will be rewarded under a forthcoming federal cap-and-trade program,” Margolis told Bloomberg.