California’s cap-and-trade auction sees record prices once again

By Blanca Begert | 02/23/2024 06:27 AM EST

Prices settled at $41.76 per ton at the 14th consecutive sold-out auction.

Emissions rise from the smokestacks at the Jeffrey Energy Center coal power plant.

Demand for California carbon allowances continued rising ahead of a planned tightening of supplies. Charlie Riedel/AP

SACRAMENTO, California — California’s quarterly auction of greenhouse gas allowances fetched record-high prices last week, the California Air Resources Board announced Thursday, generating approximately $1.31 billion for state coffers.
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Last week’s sale of permits at $41.76 per ton was the 14th consecutive auction to sell out, signaling strong demand from companies that have to buy emissions permits under the cap and trade system.

The Greenhouse Gas Reduction Fund, which distributes the auction proceeds, is gaining more attention this year as a budget deficit drives agencies and lawmakers to look for backfill funding from the growing pool. The money is used to fund climate and environmental programs from wildfire mitigation to high-speed rail. Several lawmakers have introduced bills to redirect some of the proceeds under a budget deficit that Gov. Gavin Newsom placed at $38 billion and the Legislative Analyst’s Office recently estimated to be $73 billion.
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One environmentalist said the high demand might be fueled by CARB’s plan to reduce the number of allowances more sharply than originally planned in order to reach the state’s 2030 emissions targets. Prices spiked last summer after the agency first discussed its plans and have continued to rise since then.