Bloomberg News

California Carbon Rises to Six-Week High on New Market Players

December 04, 2012

California carbon rose to the highest level in almost two months as more companies were seen trading allowances and on speculation that Edison International (EIX:US)’s San Onofre nuclear power plant will remain shut next year.

Futures based on California carbon allowances for 2013, the first year of compliance under the state’s cap-and-trade program, jumped 8.6 percent yesterday to $13.20 a metric ton, the most since Oct. 19, data compiled by CME Group Inc. (CME:US)’s Green Exchange show. Prices had slipped to $12.65 a ton at 1:30 p.m. New York time today, Lenny Hochschild, head of global carbon trading for broker Evolution Markets, said.

“We’re all continuing to see additional participants in the marketplace,” Hochschild, based in San Francisco, said by telephone. “It’s a combination of San Onofre shut and these new entrants in the marketplace that’s helping support prices.”

Carbon futures slid last week to a record low of $11.55 a ton after allowances, each permitting the release of one ton of carbon, sold in a Nov. 14 auction just above the minimum price of $10. The carbon-trading system will eventually cover 85 percent of emissions released in California, whose economy was valued at $1.74 trillion last year.

The U.S. Nuclear Regulatory Commission held a hearing Nov. 30 on the restart of Unit 2 at Edison’s San Onofre nuclear power station. Units 2 and 3 have been shut since January after the company discovered tube wear. Edison, which detailed repairs during the meeting, has yet to release a schedule for the plant’s return.

Permit Auction

The California Air Resources Board sold all 23.1 million carbon permits offered at the Nov. 14 auction for the first compliance period of the program starting next year. The permits were expected to clear between $12 and $15 a ton, according to Bloomberg New Energy Finance.

The agency said yesterday that it will sell at least 56.8 million allowances for the first phase of the program next year and 38.2 million permits for compliance in 2016. The lowest allowable price during next year’s sales will be $10.71 a ton.

The board is scheduled to hold four auctions on Feb. 19, May 16, Aug. 16 and Nov. 19.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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Companies Mentioned

  • EIX
    (Edison International)
    • $58.07 USD
    • -0.05
    • -0.09%
  • CME
    (CME Group Inc/IL)
    • $80.69 USD
    • 0.82
    • 1.02%
Market data is delayed at least 15 minutes.
 
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