California’s latest quarterly auction for carbon emission allowances was “another financial washout” when it took place in February, with only 16.5% of the available permits selling for the floor price of US$13.57 per ton, according to the Sacramento Bee.
“Almost all of February’s proceeds went either to California’s utilities, who sell allowances they receive free from the Air Resources Board, or the Canadian province of Quebec, which offers emission allowances through California,” the Bee reports. “Both are first in line when auction proceeds are apportioned.”
The state’s cap and trade revenues had bounced back in November, after poor results in the two previous quarters, with buyers snapping up almost 90% of the available permits. Analysts blamed the February result on a surplus of emission credits, combined with political and legal uncertainty over the state’s carbon cap-and-trade program.
The latest auction result means California will only raise $8.2 million for this round of allowances, far short of the nearly $600 million it would have taken away if all the allowances had sold. “The paltry auction revenues will likely stall Gov. Jerry Brown’s 2017-18 budget plan to spend $2.2 billion on a variety of climate-related programs and projects, including $800 million on his bullet train project,” writes Bee political correspondent Dan Walters.
“Today’s anemic auction results demonstrate that the state’s landmark cap-and-trade program is in need of reform and the kind of market certainty that only the legislature and governor can provide via statute,” said Senate President Pro Tem Kevin de León. “We need a program that both reduces pollution and provides stable funding to clean up climate emissions.”