CalMatters published my oped on last week’s problematic cap-and-trade auction:
Successful auctions normally bring in between $600 million and $800 million per quarter to support a wide variety of air quality, climate and fire protection programs, but now – in the middle a massive budget crisis – those funds are gone. So how did a program touted as the leading approach to climate policy produce yet another crisis?
Simple: the program has too many allowances. Every year to date, the Air Resources Board has made more allowances available to market participants than there are climate emissions. That has led to a growing private “bank” of unused allowances that depress market prices and risk revenue shortfalls at quarterly auctions.