California cap-trade passes second test better than first

California's cap-and-trade passed, barely, its first test last fall with an auction price that just barely exceeded the $10/ton minimum price.  The second auction of carbon allowances last week went better, with all carbon allowances selling at $13.62/ton, right in the middle of the expected range of $11-15/ton.  The amount of carbon allowances released for auction isn't so big that regulated buyers figured they only needed to pay the minimal amount because it would only take minimal effort to comply with or buy allowances later, nor was it so little that buyers were forced to pay top dollar and would then come screaming that the political system is demanding more change than is economically feasible.

Coming in at another $3/ton also means more money available to fund the other important parts of California's climate mitigation plan.  Finally, half the 2016 allowances were sold, which is fine - the market has another way to satisfy the same demand by selling them as futures.

So far, the California system seems to be doing a lot better than Europe's.  Probably not a huge surprise - we got to see what didn't work.

Incremental progress - we just need more of it and faster.