California cap and trade updates

Learn how the market is doing

California officially launched its world class cap-and-trade program for greenhouse gas pollution on January 1, 2013. California Carbon Allowances (CCAs) are auctioned by the State’s Air Resources Board on a quarterly basis through 2020.

Year One update

A new EDF report, Carbon Market California: A Comprehensive Analysis of the Golden State’s Cap-and-Trade Program, Year One [PDF], provides a market update after one full year of successful implementation.

Key indicators of early success

  • California placed a cap on carbon, while the state’s economy, the 8th largest in the world, continued to rebound.
  • California’s carbon market weathered legal challenges and demonstrated a smooth launch and viability in its first year.
  • Five successful quarterly auctions with full sale of current year allowances, and an actively trading secondary market, are strong indications of a well-designed program.
  • California’s program is serving as a model for the rest of the world. China, Australia, and three states and provinces along the Pacific Coast of the North America signed memorandums of understanding with California to guide collaboration in addressing climate change, and as of January 1, 2014 Quebec and California formally linked their cap-and-trade programs.

Quarterly auctions

Who participates in the quarterly auctions?

Most California’s major emitters (with historical greenhouse gas emissions over 25,000 metric tons of CO2 equivalent per year) are or will be required to comply with cap-and-trade regulation and can choose to participate in the quarterly auctions to fulfill their compliance obligation. Companies that are not regulated, as well as individuals, can also participate in the auctions as long as they register, meet the financial regulatory requirements and post bid guarantees.

Who sells the allowances and what types of allowances sell at auction?

Although the auctions are run by the state, only a portion of the allowances sold at the auctions are owned by the state, with the rest owned by the state’s utility companies. Two types of allowances are auctioned: current year vintage and future year vintage. Current year allowances are eligible for use starting the year in which they were auctioned and future year allowances can be banked for later use but may not be used for compliance until their vintage year. Each auction has a minimum allowable bid, or "floor price," which started at $10 in 2012 and increases every year by 5% plus the rate of inflation.

Floor price
2014 $11.34
2013 $10.71
2012 $10.00

Auction results to date

In all five of the successful auctions held to date, every 2013 vintage allowance sold above the floor price. In the two most recent auctions, all 2016 future vintage allowances also sold above the floor price, indicating growing confidence in the market’s strength and longevity. More information regarding the auction results are available at the California Air Resources Board’s auction website.

August 2014
Vintage 2014:  22,473,043 sold (100%) at $11.50
Vintage 2017:  6,470,000 sold (70%) at $11.34

May 2014
Vintage 2014: 16,947,080 sold (100%) at $11.50
Vintage 2017: 4,036,000 sold (44%) at $11.34

February 2014
Vintage 2014: 19,538, 695 sold (100%) at $11.48
Vintage 2017: 9,260,000 sold (100%) at $11.38

November 2013
Vintage 2013: 16,614,526 sold (100%) at $11.48
Vintage 2016: 9,560,000 sold (100%) at $11.10

August 2013
Vintage 2013:13,865,422 sold (100%) at $12.22
Vintage 2016: 9,560,000 sold (100%) at $11.10

May 2013
Vintage 2013: 14,522,048 sold (100%) at $14.00
Vintage 2016: 7,515,000 sold (79%) at $10.71

February 2013
Vintage 2013: 12,924,822 sold (100%) at $13.62
Vintage 2016: 4,440,000 sold (46%) at $10.71

November 2012
Vintage 2013: 23,126,110 sold (100%) at $10.09
Vintage 2015: 5,576,000 sold (14%) at $10.00