California Carbon Credits Sell Out in Recent Auction
The results of the latest auction of credits for use in California’s climate change program showed continued strong demand for tradable permits. According to the agency that oversees the program, all 22 million credits in the August 21, 2014 auction sold out, with a market-clearing price of $11.50 per credit. These credits can be used by companies subject to the program this year, while permits to be used in later years also showed strong demand, selling over 6.4 million out of 9.2 million offered, with a clearing price of $11.34 per credit.
The results of this auction – the state’s eighth since the program commenced in 2013 – shows that regulated companies and market participants continue to invest in purchasing credits to comply with the program, including those needed in future years. Notably, the price of these credits has appreciated since the first auction held in late 2012. Back then, as we reported on this blog, the market-clearing price per credit was $10.09. Today’s clearing price of $11.50 represents an appreciation of almost 14% over the past 18 months. This price appreciation likely reflects the growing confidence in the program as it has sustained legal challenges and political pressure over its first few years of operation.
Attorneys at Lawyers for Clean Energy have advised companies subject to the California climate change program in connection with deals to trade carbon permits. For more information, please contact us here.