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IETA RGGI Certification Final May 3 2011

IETA RGGI Certification Final May 3 2011

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Published by ieta2
The International Emissions Trading Association (IETA) submitted a certification to the New Jersey Attorney General regarding the Superior Court of New Jersey case Lagerkvist v. New Jersey Department of Environmental Protection on April 20, 2011. IETA is supporting the New Jersey Attorney General's motion to dismiss the plaintiff's claim that the RGGI auction information should be released in response to a Freedom Of Information Act request. IETA has concerns that releasing specific information about bidders could adversely affect participants, facilitate market manipulation, and make RGGI allowance auctions less competitive. The New Jersey Attorney General has included this certification in their submission to the court.

The International Emissions Trading Association (IETA) submitted a certification to the New Jersey Attorney General regarding the Superior Court of New Jersey case Lagerkvist v. New Jersey Department of Environmental Protection on April 20, 2011. IETA is supporting the New Jersey Attorney General's motion to dismiss the plaintiff's claim that the RGGI auction information should be released in response to a Freedom Of Information Act request. IETA has concerns that releasing specific information about bidders could adversely affect participants, facilitate market manipulation, and make RGGI allowance auctions less competitive. The New Jersey Attorney General has included this certification in their submission to the court.

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Published by: ieta2 on May 04, 2011
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05/04/2011

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SUPERIOR COURT OF NEW JERSEYLAW DIVISION MERCER COUNTY
 MARK LAGERVIST,Plaintiff v.NEW JERSEY DEPARTMENTOF ENVIRONMENTAL PROTECTION,And MATTHEW J. COEFFER, in hisOfficial capacity as the Custodian of Government Records,Defendants.DOCKET NO: MER-L-2185-10CERTIFICATION OF DAVID HUNTER IN SUPPORT OF THE DEFENDANTSMOTION TO DISMISS
I, David Hunter, of full age, hereby certify as follows.1.
 
I am currently the United States Director of the International Emissions TradingAssociation (IETA), a position I have held since August, 2007.2.
 
IETA is dedicated to the establishment of market-based trading systems for greenhousegas emissions that are demonstrably fair, open, efficient, accountable, and consistentacross national boundaries. IETA has been the leading voice of the business communityon the subject of emissions trading since 2000. Our 155 member companies include someof North America’s, and the world’s, largest industrial and financial corporations— including global leaders in oil, electricity, cement, aluminum, chemicals, paper, and banking; as well as leading firms in the data verification and certification, brokering andtrading, offset project development, legal, and consulting industries. A list of IETAmembers is included in attachment A and is also available at www.ieta.org.
 
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3.
 
A number of IETA members have participated in the quarterly RGGI CO
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allowanceauctions.4.
 
I make this certification in support of New Jersey’s motion to dismiss and brief filed inresponse to the complaint captioned Lagerkvist v. New Jersey Department of Environmental Protection, Docket No. ME-L-2185-10.5.
 
I understand that New Jersey Department of Environmental Protection has received arequest under its public records law seeking disclosure of information related to the firsteight RGGI CO
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auctions, including, a) the names of all bidders, b) the price of each bid,and c) the quantity and type of CO
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allowance sold to each successful bidder.6.
 
The purpose of this certification is to demonstrate that the information requested by the plaintiffs, including the names of bidders, the quantity and price of individual bids, andthe reward of allowances is proprietary information and should remain confidential.7.
 
Releasing such specific information about bidders could adversely affect participants,facilitate market manipulation, and make regional RGGI allowance auctions lesscompetitive.8.
 
Publicly releasing information related to bidding strategy and the quantity and price of allowances awarded could allow competitors to more accurately estimate a firm’s coststructure and use this information to their advantage.RGGI Market & Auction Characteristics9.
 
RGGI is unlike any environmental compliance market that is currently operating in theU.S. or elsewhere, in that the vast majority of allowances are obtained through theauction process instead of directly allocated to covered sources. Between 85 and 90
 
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 percent of all RGGI allowances available in the first compliance period (2009 – 2011)will be offered at auction.10.
 
In contrast, EPA auctions less than 3 percent of all available SO
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allowances on an annual basis. The remaining allowances are allocated to covered sources based on historicalemissions. Therefore, the useful market information that is revealed by releasing bidder information is minimal as compared with releasing the same type of data for RGGIauctions. Given the relatively small quantity of allowances available, colluding to alter the Acid Rain Program auction clearing price would also have little or no impact onallowance prices in the secondary market.11.
 
Under the Acid Rain Program auction, participants are awarded allowances at the price of their bid instead of at a uniform price as in the RGGI auctions. These two formats resultin different optimal bidding strategies for the auction participants.12.
 
Furthermore, it is acceptable to release data on account holdings for the Acid RainProgram because these are predominantly determined by historical emissions, which are amatter of public record. RGGI allowance holdings are based primarily on auction purchases, which directly figure into a company’s projected levels of electricitygeneration.13.
 
Even though current and future vintage RGGI allowances have cleared at the auctionreserve price for the past three and five auctions, respectively, market manipulationremains a real risk given the potential for policy changes that could affect the futureavailability of allowances.Potential Negative Impacts from Disclosure of Confidential Information

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