Allowances to emit greenhouse gases in the Northeast U.S. sold for $2.05 a ton in the latest auction held by a 10-state cap-and-trade program, falling to their lowest level.

Auction prices in the Regional Greenhouse Gas Initiative, or RGGI, have fallen steadily for most of the year amid a slump in electricity demand and uncertainty over possible federal limits on emissions. The price was more than 6% lower than the last auction in September, but remained above the lowest allowed price of $1.86 a ton of carbon dioxide.

RGGI places a limit on emissions from power plants of heat-trapping gases linked to climate change in a swath of the Northeast stretching from Maine to Maryland. Under the program, an emissions limit is in place and allowances are auctioned off, with power companies buying and selling them depending on their ongoing emission levels. RGGI is considered the nation's first market-based, mandatory cap-and-trade program for CO2.

The auction price for allowances that can be used starting in 2012 was $1.86 a ton. A total of 28.6 million and 1.6 million allowances sold for 2009 and 2012, respectively, raising $61.6 million for the participating states.

This week's auction was the sixth under RGGI. The next auction is set for March 10.

-By Mark Peters, Dow Jones Newswires; 212-416-2457; mark.peters@dowjones.com
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