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Carbon Market in CA Caps off Successful First Year

reyna, emily, EDFThe results of California’s fifth carbon auction were released last week, marking an important environmental milestone for the state – one year since the debut of its cap-and-trade system.

While international climate discussions drag on in Warsaw, Poland, last week’s milestone is further demonstration of the importance of California’s continued leadership on climate action, putting the world’s first economy-wide cap on emissions, and using a market mechanism to put a price on carbon. Today’s results cap off a successful year. As our one year report in January will show, the auctions have run smoothly, allowance prices have remained stable and reasonable, and compliance entities are participating. In addition, allowances are selling, official offsets have been issued, Quebec linkage will begin in under 2 months and legal uncertainty has been lifted. Congrats California, the positive momentum of your smart climate policies continues on both strong legal and policy footing.

Overview of fifth auction results

For the second auction in a row, all current and future allowances sold, demonstrating continued viability of the market and bringing total state auction proceeds to more than $530 million. That money must be invested in projects that reduce climate pollution, and at least 25%, or over $130 million to date, will provide clean energy opportunities to disadvantaged communities.

nov13 results

Last week 16,614,526 current (V13) allowances sold at $11.48 and 9,560,000 future (V16) allowances sold at $11.10.  For V13 allowances, there were almost 2 times more credits bid on than were sold which demonstrates strong demand in the market. As was expected by analysts, the fifth auction showed a lower settlement price than in previous auctions. This is normal for end of year auctions as many of the covered entities have likely already purchased the allowances they need to cover their 2013 emissions targets.  Still, the complete sale of allowances indicates participants are confident the market is here to stay and are serious about preparing for future compliance obligations.

Keeping our eyes on the prize of reducing emissions

We are steadfast in ensuring that this first year is just the beginning; California’s cap-and-trade program and emission reduction goals remains robust, with life beyond 2020.

As documented by the CalEPA, the impact of climate change is already affecting the state in the form of more frequent and intense wildfires, shrinking glaciers and snowpack, and hotter temperatures. In fact, 2013 is predicted to be the driest year ever recorded in California. With this data, we can’t afford not to reduce our emissions to avoid the worst impacts of climate change.

As expected, cap-and-trade is a working solution. It is incentivizing the state’s dirtiest polluters to find innovative , low-cost solutions to reduce emissions and is garnering interest at home and around the world. In the spirit of the season, we are thankful that this first year of auctions has been remarkably successful; that the economy is recovering and that the state is on track to meet its 2020 emission reduction goals.

Emily Reyna is the Senior Manager of Partnerships and Alliances for California’s Climate & Air team in the San Francisco office. In this role, Emily is responsible for engaging and forging common ground with businesses and other key stakeholders to further EDF’s work on implementation of California’s Global Warming Solutions Act (AB 32). Emily previously worked in EDF’s Corporate Partnership’s Program on EDF Climate Corps, an innovative program that places specially-trained MBA and MPA students in companies, cities and universities to build the business case for energy efficiency.California, today’s auction results proved once again the numbers are on our side. This article was republished with permission from the EDF. See more at: http://blogs.edf.org/californiadream/2013/11/22/californias-carbon-market-caps-off-successful-first-year-of-auctions/#sthash.0yBL1Mio.dpuf

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10 thoughts on “Carbon Market in CA Caps off Successful First Year

  1. “Quebec linkage will begin in under 2 months and legal uncertainty has been lifted.”
    Meaning C taxes collected in CA will be sent to the British Empire? And there I thought we won a battle that started over the King’s Tea Tax?
    So, the CA & US Constitution allow British taxation without representation?
    This helps U.S. & CA how?

  2. I see that CO2Good is once again spewing forth already-debunked nonsense regarding California “taxes” going to the “British Empire”. I have already provided links and evidence that completely disprove this false claim. California auction proceeds (not a tax) are, by California law, required to be allocated only to state agencies – not to Canada, not to canadian trees (another one of CO2Good’s previous laughable claims on the topic), and not to any part of the British Empire.

  3. Here are some links verifying the above debunking of CO2Good’s ridiculous claims. First is a general description of the auction proceeds investment plan: http://www.arb.ca.gov/cc/capandtrade/auctionproceeds/auctionproceeds.htm.
    Next we have the actual investment plan for the period 2013-2016: http://www.arb.ca.gov/cc/capandtrade/auctionproceeds/final_investment_plan.pdf. This latter link contains the following quote: “This implementing legislation requires that the Department of Finance (Finance) submit a plan to the Legislature which identifies priority investments that will help achieve greenhouse gas reduction goals. Funding will be appropriated to State agencies by the Legislature, consistent with the three-year investment plan submitted by the Administration.” Notice that it does not say that ‘funding will be appropriated to Canada by the Legislature…’, or that ‘funding will be appropriated to the British Empire by the Legislature…’. Oh, well – nice try, CO2Good … I guess.

  4. Debunk me? C taxes don’t go to British Empire?
    Hey, it’s in your story line; “Quebec linkage will begin in under 2 months and legal uncertainty has been lifted.”
    If your CA C tax money isn’t going to British Empire, what does “Quebec linkage” mean?

  5. BACKGROUND:

    The California Cap on Greenhouse Gas Emissions and Market-Based
    Compliance Mechanisms Regulation (Regulation) was adopted by the
    California Air Resources Board in October of 2011, and formally
    went into effect January 1, 2012. Entities subject to the
    Regulation will have a compliance obligation for their greenhouse
    gas emissions beginning on January 1, 2013. The Regulation was
    amended in early 2013 to link the California and Quebec programs
    beginning January 1, 2014.

  6. CO2Good asks: “If your CA C tax money isn’t going to British Empire, what does “Quebec linkage” mean?” Here is the answer to his question:
    Quebec linkage mainly means that the total number of carbon credits in the market will be jointly managed to cover the total emissions of the linked system (CA and Quebec). It manifestly does not mean that CA auction proceeds will be transferred to Quebec – just as it does not mean that Quebec auction proceeds will be transferred to CA.

    Get it CO2Good? Probably not.

  7. Read my posting above, CO2Good (perhaps you skimmed over it too quickly – or didn’t bother reading it at all…). I provided a word-for-word quote from the actual CA auction proceeds investment plan; that clearly and unequivocally states how CA auction proceeds are to be distributed to CA state agencies and not to Quebec or to any other entity – period.
    Yeah – I’d say your charge is pretty much debunked.

  8. CO2Good asks: “If your CA C tax money isn’t going to British Empire, what does “Quebec linkage” mean?” Here is the answer to his question:
    Quebec linkage mainly means that the total number of carbon credits in the market will be jointly managed to cover the total emissions of the linked system (CA and Quebec). It manifestly does not mean that CA auction proceeds will be transferred to Quebec – just as it does not mean that Quebec auction proceeds will be transferred to CA.

    Get it CO2Good? Probably not.

  9. Read my posting above, CO2Good (perhaps you skimmed over it too quickly – or didn’t bother reading it at all…). I provided a word-for-word quote from the actual CA auction proceeds investment plan; that clearly and unequivocally states how CA auction proceeds are to be distributed to CA state agencies and not to Quebec or to any other entity – period.
    Yeah – I’d say your charge is pretty much debunked

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