California 2012 Carbon Levels Flat, BNEF Says

California’s greenhouse-gas emissions were unchanged in 2012, Bloomberg New Energy Finance said, which may reduce demand for allowances in the state’s carbon market.

The California Air Resources Board reported a 2 percent increase in emissions in 2012 from 2011, including some data that it said may have been double counted. William Nelson, a New York-based analyst for New Energy Finance, said output in both years was about 351 million tons of carbon dioxide.

Last year “was widely considered by everybody the year we expected to see a carbon surge -- but it was flat,” Nelson said in an interview today. Power-sector emissions that increased about 35 percent were offset by lower output from transportation fuels and electricity that was imported into the state.

California’s cap-and-trade program seeks to reduce greenhouse gas output to 1990 levels by 2020. The state established a carbon market to allow emitters to buy and sell pollution allowances to meet those restrictions. California issues enough allowances to cover about 90 percent of average emissions, with the cap declining annually.

“We’re aware of the possibility, and we point it out in a footnote -- we’re not misleading,” Dave Clegern, a spokesman for the California Air Resource Board, said by phone. “There is a reference to the double-counting issue in the summary on our website.”

California is having an auction today for 16.6 million carbon permits that allow for emissions as early as this year, and another 9.6 million allowances that can be used beginning in 2016.

The state’s carbon market might approach a supply-demand equilibrium around 2026, Nelson said. “Around 2020,the emissions and offsets may start to sync up with the cap, but there will be 150 million extra credits floating around.”

(BNEF corrects headline and first two paragraphs of story published Nov. 19 to note that state agency recognized some emissions data may have been double counted.)
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