SACRAMENTO, California — Prices for California carbon emission permits fell Thursday to their lowest level in four years amid continued questions about the program’s future.
What happened: The quarterly sale of pollution permits that high-emitting companies buy from state regulators to cover their operations in California saw prices settle at $25.87 per ton of carbon in the May 21 sale, $3.40 below the February 2025 price. The auction failed to sell all of the available allowances — marking the first time since the pandemic that demand hasn’t met available supplies.
The sale generated roughly $595 million for state coffers, half the proceeds of last year’s May auction.
Why this matters: The results do not portend well for the state’s coffers at a time when the state is already facing a roughly $12 billion budget deficit. Gov. Gavin Newsom’s (D) administration had proposed backfilling cuts to the general fund with the usually reliable revenue generated from the cap-and-trade auctions, but had assumed prices would be at $38 per ton.
