California Dreamin', Again?
Chart of the Week
It would appear the of Dec 2024 California Carbon Allowances found a bottom sometime last month. With carbon markets a hot election issue – especially in the U.S., market speculators that left the market en masse during most of 2024 when the Trump trade was on are now starting to come back. The price of Québec-California carbon allowances has rebounded from near its USD 24.04$ government-regulated floor price. However it remains some 25 percentage points of from the January 2024 peak.
Though some uncertainties persist, the recent rebound in California Carbon Allowances suggests that carbon markets are far from losing steam. Some U.S. states, such as Washington, are looking to get out of the Western Climate Initiative (WCI) market, while other states like New York dreaming of one day joining. As the politics continue to evolve, we see opportunities for investors who stay focused on the long-term benefits of carbon trading and remain attuned to regional policy shifts.
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