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California Cap-And-Trade Auction Fails to Sell Out

Banked carbon credits from pandemic may hurt market

The latest quarterly auction in California’s cap-and-trade carbon market failed to sell out, a sign that a growing surplus of banked credits may be hampering the system used to fight climate change.

The market, which also includes the Canadian province of Quebec, holds quarterly auctions of “allowances,” each of which gives the holder the right to emit one ton of greenhouse gases. The number of allowances available decreases over time, giving companies an incentive to cut their emissions. Holders can also sell their allowances on a secondary market.