Carbon may come cheaper than first predicted when California’s cap-and-trade program finally gets rolling.
Analysts at Thomson Reuters have dropped their projections of what polluters would pay for emissions permits from $40 to $36 per metric ton of CO2-equivalent gases.
Emilie Mazzacurati, who heads the firm’s North America Carbon Team, says pushing back the compliance date to 2013 and fears of a double-dip recession are behind the 10% trimming from its prior forecast.
Analysts say they expect greenhouse gas emissions to decrease in a sluggish economy. In 2009 and 2010, California’s emissions from power plants dipped by 12% due to a combination of milder temperatures, leading to less air conditioning demand, and a lull in manufacturing.
The trading price assumes that California goes it alone in cap & trade, although two Canadian provinces are expected to join the market eventually. Rules for the State’s cap & trade program have to be finalized by the end of October.