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California's Latest Emissions Auction Falls Short

California's latest auction of greenhouse gas (GHG) emissions credits in its cap-and-trade program fell short of selling all of its 26.1 million air pollution allowances. All of the 2014-vintage credits sold, but less than half of the 2017-vintage credits found buyers.

Natural gas-fired electric generation plants and refineries are among the bulk of the participants in the auctions carried out by the California Air Resources Board (CARB), the state unit mandated with implementing a 2006 climate change law (AB 32).

For the under-sold 2017-vintage GHG allowances, there were 9.26 million available and slightly more than 4 million sold for a settlement price of $11.34/credit. For the 2014-vintage allowances all 16.9 million were sold for a settlement price of $11.50/unit. The auction reserve or floor price for both vintages was $11.34.

The latest auction, the state's seventh since the program began two years ago, generated $240.6 million in revenues ($194.8 million from 2014-vintage sales and $45.7 million from the 2017-vintage allowances).

The sale was conducted May 16, and an independent market monitor oversaw the process and declared that the total volumes cleared were correct. It has recommended that the CARB board members approve the auction results.

CARB reported that the bulk of the 2014-vintage allowances (13.2 million allowances) were offered in the auction by investor-owned utilities, and that $152 million in revenues will be eventually returned to ratepayers, with estimates longer term for up to $20 billion being returned through 2020 (see Daily GPI, Nov. 28, 2012).

All of the state's major private and public sector utilities participated in the auction, along with many major players from the energy sector, including units of Chevron, Sempra Energy,  Occidental Petroleum Corp., and ExxonMobil.

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