From Allison Davis of our San Francisco Office:

As predicted earlier, the U.S. Northeast’s cap-and-trade program, RGGI (Regional Greenhouse Gas Initiative) will reduce its cap, which was above current pollution levels.  The inflated cap depressed the RGGI permit price for carbon credits to under $2, way below the projected $20-$30 (causing New Jersey’s Chris Christie to pull New Jersey out of RGGI).  The lower cap should stimulate interest and raise RGGI permit prices in the next auction.  The original cap was set at 2009 emission levels, with the expectation that emissions would grow.  However, emissions have dropped dramatically because of the use of natural gas and other efficiencies in the nine-state area, reducing the demand for the permits.

The full press release from RGGI can be found here.