California carbon allowance prices have regained the $28 level, bringing the market back to where it stood in early April, before President Trump issued his Executive Order on state climate policy. The Order set a notional deadline of June 7 for the Attorney General to provide a report on what actions were being taken to end the enforcement of laws “purporting to address ‘climate change’ or involving ‘environmental, social, and governance’ initiatives, ‘environmental justice’, carbon or ‘greenhouse gas’ emissions, and funds to collect carbon penalties or carbon taxes.”

With the June 7 deadline now past and no report having been made public, the CCA price recovery may reflect growing sentiment among market participants that any attack on the cap-and-trade program appears to be postponed or perhaps shelved altogether. The December 2025 CCA futures contract posted a 5.7% monthly gain in June, closing the month at $28.39/ton on ICE Futures, the second monthly gain in 2025.

Despite the recovery above $28/ton, the California market is still awaiting clarity on the legislative process to reauthorize the market for the period after 2030, as well as the finalized market reform. Parallel legislation in both houses of the legislature to reauthorize the market was tabled in February. While the state assembly version of the bill remains unaltered in its simple language stating their intention to extend the market, the Senate version has removed the reauthorization language. The assembly is set to hold its hearing on the bill on July 16. That said, we may not see an update on authorization until after the state legislature's one month summer break starting July 18.

Market reaction to this news was fairly muted, with some traders pointing out that prices had little further to fall before they were level with the auction reserve price. It’s the lack of any federal action despite the Attorney General’s June 7 deadline that has awakened some renewed optimism.

Also in California, legislators have proposed setting a cap on the maximum price for low-carbon fuel standard (LCFS) credits at around $75/ton, which will take effect at the start of 2025. Prices are currently just below $50/ton. The price cap was set at $200/ton when the market launched 2016, and with adjustments for inflation, has risen to nearly $269/ton today. Some observers have suggested that the cap on LCFS credit prices may be a potential negotiating chip to enable a more ambitious target under the cap-and-trade system.

And in other news, the state’s Energy Commission (CEC) has asked for more time to analyse the potential impact of a regulation that would set an upper limit on oil refiners’ margins. CEC has been tasked with carrying out impact assessments on the changes, which were proposed by Governor Gavin Newsom in order to reduce volatility in the state’s oil products market.

Carbon Market Roundup

The weighted global price of carbon was $50.70, up 1.2% week over week. EUAs were up 2.4% at €72.06. UKAs were up 1.8% at £48.50. CCAs were flat for the week at $28.21. RGGI prices trended down 3.1% at $22.86. WCAs were roughly flat at $61.74.