California’s Thirty-Third Carbon Auction Prices Decline

The thirty-third quarterly carbon auction held by California and Quebec sold more than 58.02 million carbon permits offered for current emissions at a price of $26.8 per allowance, above the floor price of $19.70, according to the results released on Nov. 23 by the California Air Resources Board. The settlement price is nearly 0.7 percent lower compared with the previous quarterly auction, which settled at $27.

The auction for vintage 2025 allowances sold all of the more than 7.9 million allowances offered for $26 per allowance, well above the reserve price of $19.70.

Parties obligated to comply with California and Quebec cap-and-trade programs made up 80.44 percent of the current vintage allowance buyers and 83.31 percent of the advanced allowance purchases, compared with 87.6 percent and 82.3 percent, respectively, at the August auction.

The cap-and-trade program has raised $19.2 billion since the beginning of compliance in 2013, according to the board. The auction proceeds are placed in the Greenhouse Gas Reduction Fund and distributed through the California Climate Investments initiative to statewide projects that deliver environmental, economic, and public health benefits across the state. The money is allocated to individual projects selected by over 20 different state agencies.

The California cap-and-trade program, which covers major sources of the state’s greenhouse gas emissions, including power plants and transportation fuels, requires a 40 percent cut in emissions from 1990 levels by 2030. The policy survived long-standing litigation when the court ruled that cap-and-trade does not impose an unconstitutional tax.

California aims to have a 100 percent clean energy grid capable of carbon neutrality by 2045, with greenhouse gas emissions reduced by up to 48 percent by 2030 and 85 percent by 2045. Quebec is aiming for a 37.5 percent reduction from 1990 emissions by 2030.