California Carbon Auction Revenues Eclipse $1 billion

For the first time in its four auctions to date, the California Air Resources Board (ARB) sold all of the allowances it offered, including both 2013 and 2016 vintages.


13.8 million California carbon allowances (CCAs) for delivery in 2013 were sold at a settlement price of $12.22, down from the previous auction’s record high of $14.


In a sign that regulated businesses are confident in the long term outlook of the California carbon market, all 9.5 million allowances to be delivered by 2016 were sold.


These vintage 2016 CCAs settled at $11.10, 39 cents over the price floor.


The combined sale of all 23 million allowances totaled over $275 million.


To date the four ARB auctions have generated over $1 billion in revenue which will be used to fund other emission reduction projects in the state, and offset any increases in electricity costs for average subscribers.


As the price for allowances continues to climb, businesses facing new emission regulations will look to take advantage of the cost savings of carbon offset credits.


The California carbon market will allow these companies to purchase carbon offset credits to account for up to 8% of their annual emissions, creating the potential demand for over 200 million credits by 2020.


With only four project types approved to supply carbon offset credits to the California market, a significant shortfall is expected, by perhaps as much as 67% in the final compliance period which runs from 2018-2020.


The first 200,000 carbon offset credits eligible for use in the California market were recently issued by the American Carbon Registry.


Forest carbon projects are expected to supply a majority of offset credits since millions of tons of carbon are stored in woodlands across the country.