California’s cap-and-trade carbon program sputters again

When California launched its cap-and-trade program four years ago, the unspoken fear was that the price of carbon emissions credits would soar out of sight and bankrupt manufacturers and other industries forced to buy them.

Now cap and trade, a crucial piece in California’s war on climate change, finds itself with exactly the opposite problem: an excess of credits and insufficient demand. The result is a program that’s stumbling badly and facing an increasingly hazy future in the Legislature.

The cap-and-trade market had another bad day Tuesday, with hundreds of millions of dollars worth of unsold carbon credits left over following the latest state-run auction. Only about 30.8 million credits were sold, each one representing a ton of carbon emissions, out of approximately 96 million credits that went on sale. The auction was held last week, but results weren’t released until Tuesday by the California Air Resources Board.

It was the second straight quarterly auction in which scores of carbon credits failed to attract buyers, although there was higher demand this time around. Last spring’s auction ended with roughly 90 percent of the credits unsold.

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