California carbon allowances trading at $12.55
California carbon allowances hit their highest price of the year so far, closing the week at $12.55.
Trading volumes were also high with 2 million California carbon allowances exchanging hands over the week.
The price for California carbon allowances to be delivered in 2014 has steadily risen over the past six weeks.
This price increase was expected since the California carbon auction floor price was raised to $11.34 this year.
As prices continue to climb, regulated businesses have shown increased interest in carbon credits.
Carbon credits represent emissions reductions that are generated from one of the California Air Resources Board’s (ARB) approved project protocols which include Forestry, Agricultural Methane Capture, and the destruction of Ozone Depleting Substances.
Each credit equals one metric tonne of carbon dioxide equivalent.
Forestry projects reward landowners for conserving their trees and the carbon stored within them. Properties generate revenue from the sale of carbon credits, instead of harvesting trees to create traditional products like lumber and pulpwood.
Companies in California can purchase carbon credits to account for up to 8% of their annual emissions. Despite the demand for up to 26 million carbon credits by the end of this year, less than 5 million credits have been issued by the ARB to date.
In an effort to obtain the limited supply of carbon credits, Southern California Edison, one of the state’s largest energy utilities, issued a Request for Offers (RFO) for carbon offset credits this week.