When California’s “cap-and-trade” auction of carbon emission allowances imploded a month ago, it clobbered ambitious plans by Capitol politicians to spend many billions of dollars.
The immediate question was whether the May 16 auction, in which the state realized just 2 percent of the money officials had projected, was a one-time thing or the harbinger of a deeper and longer decline.
The official response from Gov. Jerry Brown’s administration, uttered by Department of Finance official Amy Costa at a state budget hearing, was, “I would caution about reading too much into one auction.”
Since then, analysts of the complex system of auctioning off rights to emit carbon dioxide have concluded that future quarterly auctions are likely to see similarly poor results, citing the legal and political uncertainty about the program’s future and a massive glut of allowances available in the secondary market for prices well below the state’s minimum price.
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