The Air Resources Board (ARB) held its fourth auction of greenhouse gas allowances on August 16, 2013. The auction included a Current Auction of 2013 allowances and an Advance Auction of 2016 allowances.
The Auction Administrator (AA) reported that the 2013 auction clearing price is $12.22 per allowance, with 13,865,422 total 2013 allowances sold. The AA reported that the 2016 auction clearing price is $11.10 per allowance with 9,560,000 total 2016 allowances sold.
According to a report in the press, about 350 businesses and cities took part. Allowances for 2013 emissions, valued at $170 million, sold out. Additionally, more than $100 million in 2016 emission credits were sold this quarter. California's cap-and-trade program came into effect in January. The first auction was held in November of last year.
AB32 is the legislation that mandated carbon trading for about 350 companies in California. In the first two years 90 percent of the credits are free. In other words, based on their emssions history companies get 90% of their emission allowances for free from the state. But by 2016, all allowances will be sold. Participants have to buy credits if they emit over 25,000 tons of carbon dioxide per year. Between 2013 and 2020, the number of greenhouse gas credits offered will decrease by 2-3 % per year, which is expected to drive up the price of the allowances.
The program is designed to be compatible with cap-and-trade programs in the Western Climate Initiative (WCI) which includes six U.S. states (California, Montana, New Mexico, Oregon, Utah and Washington) and four Canadian provinces (British Columbia, Manitoba, Ontario and Quebec).