California’s Cap-and-Trade Program Gains Confidence

At last month’s carbon allowance auction, the fourth ever held, the California cap-and-trade program reached an important milestone. The auction of “current year allowances”, or permits that companies can use for this year’s carbon pollution, have sold out at every auction thus far- but this was the first time the auction completely sold out of its permits for future carbon pollution, for the year 2016 to be exact.

California sold almost 10 million future year permits at a clearing price of $11.10 per allowance, and almost 14 million current year permits at a clearing price of $12.22 per allowance. Never before has there been this great of a demand for future permits. Most believe this surge in interest reflects a growing confidence in California’s cap-and-trade program, and increasing recognition by state businesses that this program is here to stay.

The cap-and-trade program, that took effect in 2012, was enacted to reduce greenhouse gas (GHG) emissions produced in California that cause climate change. The programs intention is to aid California in meeting its goal of reducing GHG emissions to 1990 levels by 2020, and overall accomplishing an 80 percent reduction from 1990 levels by 2050.

The recent carbon auction is a small achievement toward reaching this long-term goal. Locus fully supports these efforts; we were one of the first accredited verification bodies for greenhouse gas emissions, and our staff have also been certified as carbon offset verifiers under the California Air Resources Board. From our years of experience reporting greenhouse gases, Locus knows that participants in the cap-and-trade program have many options available to them in how they calculate and report their GHG data, and it is our personal goal to help them choose the best methods, through our technical experts or by using Locus’ cloud-based GHG software.