California carbon allowances trading at $13.05

California carbon allowances for delivery in 2016 have seen their prices jump above 2013 allowances, closing the week at $13.05.


The combined trading of California carbon allowances to be delivered in 2013 and 2016 amounted to over 2 million allowances.


Vintage 2013 California carbon allowances reached a price of $12.65, closing above last week’s clearing price.


Since the results of this month’s carbon auction were released two weeks ago, future 2016 allowances have continued to see higher demand than their 2013 counterparts.


This likely stems from proposed changes to the California Air Resources Board’s (ARB) market regulations, which could allocate additional allowances to regulated businesses for free in an effort to ease the transition to new emission standards.


Beginning this year, large businesses like power plants and fuel refineries have had to begin accounting for the emissions associated with their operations.


In addition to allowances, these companies can purchase carbon offset credits to meet up to 8% of their compliance obligation, creating the potential demand for over 200 million credits by 2020.


However, only a handful of project types have been approved by the ARB to generate offset credits for use in California.


Forest carbon projects are expected to provide a significant amount of credits, since millions of tons of carbon are stored in woodlands across the US.