California’s Third Cap And Trade Auction Sells Out, At Record Price
May 24, 2013 Silvio Marcacci
Seems like someone forgot to tell California that cap and trade was dying an untimely death.
The state’s third carbon allowance auction was held last week, and businesses snapped up all available 2013 permits, setting a record price level in the process. In addition to the 2013 permits, over three-quarters of advance allowances for 2016 were sold to businesses.
With just over six months left until California links up to Quebec’s cap and trade market through the Western Climate Initiative, the system’s growing strength is apparent and stands as yet another example of how the EU Emissions Trading System’s collapse isn’t the end of cap and trade.
Permits Selling Out, For Record Prices
The May 16 auction was California’s third, and sold more than 14.5 million allowances for $14 per ton. Permit prices have continued their brisk rise, increasing from $10.09 in the first auction held November 2012 to $13.62 in the second auction held in February 2013. Every auction held to date has sold out of all current allowances offered.
While the price for advance allocations covering emissions in 2016 held steady at the market floor price of $10.71 per ton compared to those sold in February, the volume dramatically increased compared to previous auctions. The system has never sold more than half of its advance allocations.
Following the auction, California allowances were trading up at $14.50 on the IntercontinentalExchange secondary market.
Roughly 50 million allowances have now been sold through the auctions, raising $256 million for clean energy investments in California, and $556 million for the state’s largest utilities to protect ratepayers from energy bill price hikes.
Keep Directing Revenue Toward Clean Energy
However, California’s market revenue has become controversial in recent weeks, perhaps a victim of its own success. Governor Jerry