The price of carbon per metric tonne rose at the May auction hosted by the California Air Resources Board (CARB). According to CARB’s recent Auction Information and Results from their auction on May 17, the settlement price of one metric tonne of carbon dioxide equivalent was $30.33, an increase from prices of $27.85 posted in CARB’s last auction in February 2023.
Here is the trend in auction settlement prices from CARB since 2018:
The May 2023 price was the second highest on record, behind prices that were recorded at CARB’s May 2022 auction ($30.85). The May 2023 auction offered and sold 56,084,237 allowances, similar to what was offered in the February 2023 auction (56,395,720 allowances).
The California ARB operates a compliance-driven carbon market. While the program was created from legislation passed in California, forestland across the United States can be enrolled. In this cap-and-trade system, emitters purchase an amount of annual emissions allowances (a cap). If they release below their cap, they can sell the remaining allowances. If they release above the cap, emitters must purchase allowances through a system such as CARB’s.
The California ARB offers greenhouse gas auctions on a quarterly basis to allow market participants to acquire allowances. The next auction will occur in August 2023.
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By Matt Russell. Email Matt with any questions or comments.