Dive Brief:

• California's year-old cap-and-trade system for carbon dioxide is working well after holding five allowance auctions, according to a report by Environmental Defense Fund.
• The carbon allowances cost about $11 on average, suggesting that reducing emissions under the cap may be less expensive than some expected, EDF said, noting that California's economy is expanding.
• A robust secondary market has developed for allowances, signaling increased confidence, familiarity, and participation in the market, EDF said.

Dive Insight:

While California's cap-and-trade program will continue to evolve, the program's first year has largely been trouble free, making it an attractive option as other states and the federal government set policies around cutting carbon emissions. The market is already expanding: California and Quebec linked their cap-and-trade programs January 1, a move that should make the carbon market more efficient and give generators more opportunities to meet the state's carbon reduction targets.