Early California carbon trading to center in Houston

Ironically the California carbon market will see a large amount of its carbon allowances trading through Houston, an oil hub in the heart of Texas.

Set to launch in 2013, the carbon market is closely tied to the energy industry since power plants and fuel refineries will be required to begin meeting new emission requirements including a cap.

Since many oil and gas companies already have offices in Houston they are likely to add personnel to focus on the impact carbon will have. Brokers have mentioned that energy firms are already including carbon values in their future price models.

Trading for California carbon allowances (CCAs) that will be accepted for use under the state’s cap-and-trade system has been steady the past several months, but it is expected for traffic to jump once companies begin positioning themselves for compliance in 2013.

Forward trading is expected to take off in the second fiscal quarter as regulated emitters begin registering with the California Air Resources Board (ARB) ahead of the first compliance auction to be held in August.

The California carbon market will continue to grow as more companies become regulated. The market’s second phase begins in 2015, when companies that export fuel and energy to California will have to begin meeting stricter emission guidelines.