California-Quebec Carbon Auction Signals Steady Market With Permits Sold Out

The twentieth quarterly carbon auction held by California and Quebec sold all of the nearly 66.3 million carbon permits offered for current emissions at a price of $17.16 per credit, above the floor price of $15.62, according to the results released on Aug. 27 by the California Air Resources Board. This is slightly below the previous May auction, which cleared at a record-high price of $17.45.

The auction sold 100 percent of the more than 9 million future allowances offered for 2022 emissions at a price of $16.85, which is also above the floor price. By comparison, the previous auction sold out a similar amount of future permits at $17.40 each, an all-time high.

California’s troubled utility Pacific Gas & Electric Company did not participate in the auction for the third time in a row. In January, the utility filed for reorganization under Chapter 11 of the U.S. bankruptcy code as it faces billions of dollars in potential liability resulting from the 2017 and 2018 Northern California wildfires.

The auctions are held under the cap-and-trade program, which places an economy-wide cap on major emitting sources. The program is a central part of California’s plan to reduce greenhouse gas emissions 40 percent below 1990 levels by 2030.