California-Quebec Carbon Auction Prices Decline

The 42nd quarterly carbon auction held by California and Quebec sold all of the nearly 51.5 million carbon permits offered under the current auction at a price of $29.27 per allowance, above the floor price of $25.87, according to the results released on Feb. 26 by the California Air Resources Board. The current auction clearing price is 8.3 percent lower than the previous auction, which settled at $31.91. The advance auction sold all of the 6.8 million allowances offered, at $28 each.

The results of the latest quarterly auction, held on Feb.19, show a decrease of around 7 percent in the advance auction clearing price from the previous auction held in November 2024. Compliance entities purchased 83.3 percent of the current allowances, closely resembling the last auction, but acquired only 59.49 percent of the advance allowances offered, down from 72.36 percent in the November auction.

While the auction sold more carbon allowances in total, the trend from the last few auctions shows an overall reduction in prices. Auction prices have declined since the record high of $41.76 last February, indicating possible market uncertainty surrounding the future design of the cap-and-trade program. The board is considering regulations governing the cap-and-trade program.

The proceeds from the sale of allowances are placed in the Greenhouse Gas Reduction Fund, which funds clean energy projects in the state through the California Climate Investments initiative.