California carbon allowances trade at $14.40
Prices for California carbon allowances (CCAs) to be delivered in 2013 remained steady this week, closing at $14.40 per allowance.
Large volumes of California carbon allowances continue to move, with over 660,000 CCAs trading over the course of the week.
Market participants are gearing up for the third Air Resources Board (ARB) California carbon allowance auction that will occur next week.
The auction will be held on May 16 and will offer over 24 million California carbon allowances.
Businesses in the state like power plants and fuel refineries, which generate over 25,000 metric tons of carbon dioxide annually, are required to account for their emissions by purchasing CCAs.
February’s auction saw 12.9 million California carbon allowances reach a settlement price of $13.62.
The two combined auctions to date have resulted in over $512 million of revenue that the state will use to fund other emission reduction projects, improve air quality, and offset any potential raises in electricity costs for average consumers.
Regulated companies have the option to meet their compliance obligation by purchasing carbon offset credits instead of CCAs.
The ARB has approved four project types for use in the California market, including Forestry projects that store millions of tons of carbon in trunks, limbs, and leaves.
Although there is demand for up to 20 million carbon offset credits, a recent study found that there will be a significant shortfall in supply by as much as 29% between 2013 and 2014.
Recently Shell Energy announced the purchase of 500,000 carbon offset credits.