California holds carbon auction conference

Last week the California Air Resources Board (ARB) held a conference for entities that will be participating in the state’s carbon allowance auction on November 14.

The meeting was held at the California Environmental Protection Agency’s headquarters in Sacramento and was simultaneously broadcast over the internet. In addition to those who attended in person, over 200 listened in remotely.

The conference discussed the auction format including the account application process, procedures and requirements for submitting bids, as well as several technical details such as purchase limits and bid guarantees.

Presenters included representatives from the ARB, Markit, and Deutsche Bank.

Markit is responsible for developing the auction platform and Deutsche Bank will act as the Financial Services Administrator for bidders. Both groups will monitor bidding activity to safeguard against any possible manipulative bidding trends.

In a recent interview, Climate Action Reserve President Gary Gero expressed confidence that California businesses facing new emission regulations will participate in the first allowance auction.

Major state emitters including Southern California Edison and San Diego Gas & Electric attended the auction bidder’s conference.

According to the official ARB Auction Notice, 21,804,539 vintage 2013 allowances will be sold, along with 39,450,000 vintage 2015 allowances.

California carbon allowances have a floor price of $10, but have recently been trading in the $15 range, even hitting a peak of $20 in July.

Nearly $1 billion in revenue will be generated from the sale of CCAs, which will then be directed to other California programs focused on reducing harmful emissions.

Governor Jerry Brown signed a bill last week requiring 25% of allowance auction revenues be allocated to initiatives that improve air quality in disadvantaged communities.