California carbon allowances trade at $13.80

190,000 California carbon allowances (CCAs) traded over the course of the week.


The closing price for California carbon allowances to be delivered in 2013 matched last week’s price of $13.80 each.


Volumes have been down in the past two weeks as market players prepare for the next California carbon allowance auction which is slated for Friday, August 16.


The California Air Resources Board (ARB) will be putting over 23 million California carbon allowances up for sale.


The ARB implemented new regulations this year that require large businesses to account for their annual emissions.


These businesses must either buy California carbon allowances or ARB-approved carbon credits for each ton of carbon dioxide they emit.


Carbon credits act as a cost containment mechanism as they are typically sold at a discount to CCAs.


Without a sufficient supply of carbon credits, the cost of CCAs would skyrocket, pushing compliance costs for regulated businesses through the roof.


Only four project protocols have been approved by the ARB to provide carbon credits for use in California.


Forest carbon projects are expected to supply the bulk of carbon credits to the market.