California carbon allowance auction raises $283 million

Results from the May 16 California carbon allowance auction were released this week, highlighting another highly successful auction for the state’s Air Resources Board (ARB).


All 14.5 million California carbon allowances for delivery in 2013 were sold at a settlement price of $14.00 apiece, more than $3.00 over the auction floor, generating over $203 million.


The May auction was heavily subscribed, with almost twice as many bids as available allowances, and a maximum bid price of $50.01.


The bulk of the allowances, roughly 90%, were purchased by companies that will be required to account for their annual emissions beginning this year.


The ARB’s Summary Report also showed heavy interest in future California carbon allowances to be delivered in 2016.


7.5 million vintage 2016 allowances were sold at a settlement price of $10.71, resulting in an additional $80 million.


The combined revenue of 2013 and 2016 California carbon allowances amounted to over $283 million.


So far the ARB has held three auctions dating back to last November and generated over $800 million in revenue to fund other emission reduction projects in the state.


The success of these auctions has prompted Quebec to link with California’s carbon market in 2014, which will further increasing the size of the world’s second large carbon market.