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Calif. carbon allowance prices edge up in quiet holiday week

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Calif. carbon allowance prices edge up in quiet holiday week

Over-the-counter prices for California carbon allowances increased in value during the week ended Dec. 22. Trading activity in secondary market for California carbon allowances was slow overall due to the Christmas Day holiday.

Broker data as of Dec. 22 showed the December 2017 vintage 2017 California carbon allowance contract in a bid-and-ask range of $15.02/tonne to $15.08/tonne, up 2 cents week over week.

The December 2018 vintage 2018 California carbon contract was marked in a bid-and-offer spread of $15.45/tonne to $15.55/tonne, rising 4 cents from the week prior.

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The California cap-and-trade system covers emissions from utility and industrial facilities, which emit more than 25,000 tonnes of carbon each year, as well as entities that opted into the program. Those facilities must purchase either state carbon allowances or carbon offsets to account for their annual emissions under the annual emissions cap. The cap is reduced annually until the 2020 target is reached.

Carbon allowances are sold at quarterly auctions run by the California Air Resources Board. Up to 8% of an entity's emissions can be covered using offset credits from certified projects. Carbon offset credits, as well as carbon allowances, can be purchased in the secondary market.

The first compliance phase of the program went into effect Jan. 1, 2013, and ran through Dec. 31, 2014. The first phase of the program included all major industrial sources, along with electric utilities. The second phase of the cap-and-trade program kicked off in January 2015 and brought in distributors of transportation fuels and natural gas under the caps. The second compliance period ends Dec. 31 of this year.

California's cap-and-trade program was linked with Québec's system in 2014.

Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.