UPDATE 1-US East carbon prices inch up in quarterly auction
* Prices had fallen in previous three auctions
* 2009-2011 permits rise 2 cents to $2.07 per ton
* Some permits go unsold in 2012-2014 period (Adds details, quotes)
WASHINGTON, March 12 (Reuters) - Prices for permits allowing power plants to emit the greenhouse gas carbon dioxide in the U.S. East rose slightly in the latest quarterly auction, states in the regional market said on Friday.
The prices for the market's first control period, which runs until 2011, rose 2 cents to $2.07 a ton in an auction held earlier this week, said the Regional Greenhouse Gas Initiative, a group of 10 states that run a cap-and-trade system on emissions from power plants.
The slight gain came as a bit of relief to brokers, traders, and government officials trying to build the nascent U.S. carbon markets. They hope to create a system that rewards polluters with credits they can sell for making investments in clean energy, such as solar and wind power, or switching to cleaner fuels, such as natural gas instead of coal.
"With each successful auction, the RGGI states continue to show that cap-and-trade works and can jump-start a green economy with fewer emissions, lower electric bills and more jobs," said David Littell, chair of the RGGI board of directors.
RGGI prices for permits in the first period had fallen in the previous three auctions as the recession and low prices for clean-burning natural gas had depressed demand for the permits.
In the latest auction, allowances for the 2012 to 2014 control period sold for $1.86 a ton, clinging to a record low the permits got in the last auction held in September, RGGI said. Each permit allows the holder to emit one ton of carbon dioxide.
Not all of the permits sold in the later period, with 46,992 permits out of 2,137,992 available failing to find a buyer, the group said. Unsold permits may be sold in future auctions according to each state's rules.
All of the 40,612,408 allowances in the first period sold.
RGGI said the auction, the group's seventh, raised nearly $89 million for investments in clean energy and energy efficiency programs.
Environmentalists have worried that some states facing budget deficits may be trying to use the funds raised by RGGI for other purposes.
The regional market was formed at a time when there was no federal action on regulating the gases blamed for warming the planet. The formation of a national cap-and-trade market on emissions from power plants, vehicles, ships and planes is far from certain as it faces opposition from lawmakers in energy-rich states.
U.S. senators crafting compromise climate legislation have said they have not settled on a mechanism to create a price on carbon. But putting a cap-and-trade market only on power plants, which emit about 40 percent of U.S. greenhouse gas emissions, may be an option.
The states in the RGGI pact are: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont. (Reporting by Timothy Gardner; editing by Jim Marshall)
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