Gov. Jerry Brown and the Legislature got some bad news Wednesday about plans to spend more than $3 billion in proceeds from the state’s “cap-and-trade” auction of carbon dioxide emission allowances.
The results of last week’s quarterly auction were posted and revealed that instead of the $500-plus million expected from the sale of state-owned allowances, the state will get only about $10 million, less than 2 percent.
The poor results confirmed reports circulating in financial circles that the cap-and-trade program has begun to stumble. February’s auction resulted in some allowances being left unsold – the first time that had happened. Afterward, there was a brisk trade in the secondary market as speculators began dumping their holdings due to uncertainty about the future of the program, which may expire in 2020.
Market followers said the sell-off indicated there would be little demand during the May auction, and the results bore out that expectation.
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