California carbon trading at $16.75

In a busy week, California carbon allowances closed at $16.75 each, with 105,000 CCAs trading over the Intercontinental Exchange.

The California carbon market continued to see high prices as businesses prepare for the November, 14 CCA auction.

Demand for CCAs has increased due to the uncertain future of a nuclear plant located near San Diego.

Nearly 8% of the state’s electricity was generated from the San Onofre nuclear plant with nearly zero emissions. Fossil fuel combusting power plants have had to increase their output to make up for the loss, adding significant emissions to the cap that will be enforced beginning January 2013.

To meet the new emissions requirements, businesses will look to carbon offset credits.

Regulated emitters will be able to purchase carbon offset credits to meet up to 8% of their compliance obligation, which could demand over 20 million carbon credits in 2013 and 2014.

Large entities like Pacific Gas & Electric and the Sacramento Municipal Utilities Department have already issued Request for Offers to buy hundreds of thousands of carbon offsets eligible for use in the California carbon market.