California carbon trading at $13

The price for California carbon allowances (CCAs) to be delivered in 2013 rose this week, closing at $13 apiece.

Over 100,000 CCAs exchanged hands over the week as the market continued to see large trading volumes.

With only two weeks remaining before California’s inaugural allowance auction, regulated entities took advantage of the low prices, since CCAs could go for much more at auction.

21.8 million CCAs to be delivered in 2013 will be auctioned, in addition to 39.5 million CCAs for delivery in 2015, when the second compliance period begins.

At the Environmental Markets Association Fall Meeting in Santa Monica last week, American Carbon Registry California Director Belinda Morris warned that the current supply of carbon offsets approved for use will not be able to meet the demand for up to 200 million California carbon offsets by 2020.

Carbon offsets are an important market mechanism to contain costs on regulated entities since they are typically purchased at a discount to allowances.