California carbon trading at $11.70

In a light week of trading, vintage 2013 California carbon allowances (CCAs) closed at $11.70.

Over 40,000 allowances traded over the week after this month’s carbon auction results were released by the Air Resources Board (ARB).

California’s first carbon auction saw a large amount of participation, with a bid to allowance ratio of 3:1 resulting in the sale of all 23.1 million CCAs for use in 2013.

Although the mean bid price was $13.75, all allowances cleared at the final accepted bid price of $10.09. For example, even though a compliance entity may have bid $14 for 10,000 CCAs, they are only charged $10.09. The auction is structured this way to achieve low cost emissions reductions.

The fact that CCA futures remain above the auction price may point to an expected increase in price in the coming months.