The Price of a Tonne · Episode 5 of 14 · 25 min
The Golden State's Market
On November 14, 2012 California sold the right to emit 23 million tonnes at $10.09 a tonne, opening the largest carbon market in the Western Hemisphere. It survived a ballot initiative, a lawsuit over whether an auction is a tax, and a federal challenge, and hit its 2020 target four years early. Critics cite local pollution hotspots and a bank of unused allowances, and a 2026 cut came paired with a nearly equal reserve.
Who's who
- Arnold SchwarzeneggerGovernor who signed AB 32 in 2006
- Fran PavleyCo-author of AB 32 and author of the 2030 target law
- Jerry Brown+2 more episodesGovernor who signed the 2030 target and the 2017 program extension
- Gavin Newsom+11 more episodesGovernor who signed the extension to 2045 and the cap-and-invest rename
- Mary NicholsAir Resources Board chair from 2007 to 2020
- Danny Cullenward+3 more episodesClimate economist and persistent inside critic of the program
- Lara CushingLead author of the 2018 study on emissions near facilities
- Kyle MengCo-author of the rebuttal finding the exposure gap narrowed
Where it happens
- California+30 more episodesHome of the largest carbon market in the Western Hemisphere
- Québec, CanadaLinked to California's market since January 2014
- Ontario, CanadaJoined the link in 2018 and quit within seven months
- Washington State+4 more episodesSigned a three-way linkage with California and Québec in 2026
Timeline
- September 27, 2006AB 32 is signed, targeting 1990 emission levels by 2020.
- November 2, 2010Proposition 23, to suspend AB 32, is defeated.
- November 14, 2012The first auction clears at $10.09 a tonne.
- July 25, 2017AB 398 extends the program and cuts offset use.
- May 29, 2026The Air Resources Board removes 118 million allowances and creates a manufacturing reserve.
- June 25, 2026Washington, California, and Québec sign a three-way linkage agreement.
Still debated
Studies disagree on whether local emissions rose near covered facilities or the exposure gap narrowed. The bank's exact size is contested, and EDF and CARB dispute whether the 2026 manufacturing reserve neutralizes the allowance cut. How much of the statewide decline is due to the cap is also unresolved.
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