Results and Insights from California's 2nd Cap and Trade Auction

04/10/2013 11:00 a.m. - 02:00 p.m.

Clean Technology and Environmental Permitting + Regulation

Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105

Seminar

Katie Koropey
kkoropey@mofo.com
(415) 268-6438

The California Air Resources Board (CARB) held the second quarterly Cap and Trade Carbon auction on February 19th, which revealed growing demand for carbon emission allowances. All 12.9 million allowances for use in 2013 were sold, at a clearing price of $13.62 per metric ton ($2.91 above the reserve price). This was up from the $10.09 price for 2013 allowances, the clearing price at the first auction on November 14th. Agrion’s December 12th expert panel discussion, “Lessons Learned from California’s First Cap and Trade Auction”, addressed many of the critical issues related to the first auction.

This second panel discussion will begin with a review of the second quarterly auction results and implications. Some of the subsequent questions which our panel will address include:

  • While this auction successfully sold all of carbon allowances offered to cover emissions for this year, less than half of the allowances offered to cover 2016 emissions were sold, and at the lowest authorized price. Is this modest demand due to the ongoing lawsuit from the Chamber of Commerce, which claims CARB lacks the legal right to raise revenue through the auctions?
  • What impact did the accidental purchase of $16 million worth of allowances by a bidder in the first auction have on the results, and credibility, of the CARB auction system?
  • How did CARB avoid this problem in the second auction?
  • What are the similarities and differences between the CARB auction system and the EU’s Emissions Trading Scheme, which experienced a roughly 50% carbon price decline in 2012?
  • Can the CARB auction system avoid unwanted price fluctuations caused by participants seeking to “game” the system?
  • What is the system’s vulnerability to impacted industry choosing to locate outside California in order to avoid paying for carbon emissions?
  • What are the leading options for allocation of Cap and Trade revenues?
  • What are the expectations for the next quarterly auction (on May 16)?

Moderator:

Speakers:

  • Erin Craig
    CEO, TerraPass
  • Millene Hahm
    Principal, Portfolio Management, PG&E
  • Andy Van Horn
    Managing Director, Van Horn Consulting

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