Initiative to repeal cap-and-trade may already be lowering carbon auction prices

Josiah Neeley, who advises the energy team at the R Street Institute think tank, said he thought “the lower prices are due to the upcoming referendum that would repeal the CCA.”

He said bidders are less inclined to spend money on a program that could be gone by the end of the year.

“Because the allowances for this year’s emissions are not due until next fall, a lot of companies did not bid [at] the last two auctions on the theory that if the referendum passes, any money spent on allowances would be a waste,” Neeley emailed The Center Square.

Some purchases, he said, could have been motivated by the possibility voters would reject I-2117.

“Some entities have bought allowances at or near the minimum price either as a hedge or as a bet that if the referendum fails the price of the allowances on the secondary market will skyrocket,” Neeley said.