Short Answer

Both the model and the market expect the official Settlement Price for the Current Auction of CARB Joint Auction #47 to strictly exceed $27.94, with no compelling evidence of mispricing.

1. Market Behavior & Drivers

This market, which asks if the CARB Joint Auction #47 settlement price will exceed $27.94, has experienced extreme volatility over a short period. The price trend began with a low probability of 15.0% before undergoing a massive 56.0 percentage point spike to a high of 71.0% on April 23. This sharp increase in positive sentiment was almost immediately followed by a correction, with the price dropping and consolidating around the current 48.0% level. The provided context does not offer any specific news or event to explain the initial dramatic price surge, suggesting it may have been driven by a small number of influential trades or initial pricing adjustments rather than a widely disseminated catalyst.
The price action has established several key levels traders are watching. The initial price of 15.0% acts as a historical floor, while the peak of 71.0% has formed a significant resistance level that was quickly rejected. The market is currently trading near the 50% mark, indicating a state of equilibrium and significant uncertainty among participants. While early price movements occurred on very low volume, the total traded volume of over 200,000 contracts suggests that significant capital has since entered the market, reinforcing the current price level as a point of contention. Overall, the chart reflects a market that has moved from low confidence to a brief period of extreme optimism, before settling into a state of near-perfect indecision about the auction's final outcome.
  • Compliance entities significantly outpurchased financial participants in Auction #46.
  • California's natural gas consumption impacts utility demand for carbon allowances.
  • CARB officials signal openness to adjusting cap-and-trade program stringency.
  • The official 2024 CARB Auction Reserve Price is set at $22.21.
  • The market experienced a substantial price spike followed by a recent drop.

2. Price Chart

Historical Price (Probability)

Outcome probability
Date

3. Significant Price Movements

Notable price changes detected in the chart, along with research into what caused each movement.

📉 April 24, 2026: 8.0pp drop

Price decreased from 68.0% to 60.0%

Outcome: Above $27.94

What happened: No supporting research available for this anomaly.

📈 April 23, 2026: 56.0pp spike

Price increased from 15.0% to 71.0%

Outcome: Above $27.94

What happened: No supporting research available for this anomaly.

4. Market Data

Contract Snapshot

The market resolves "Yes" if the official Settlement Price for the Current Auction of CARB Joint Auction #47 strictly exceeds $27.94. It resolves "No" if the price is $27.94 or less, or if the auction is cancelled, postponed, or its summary report is not published by the May 30, 2026, 3 PM ET deadline. The Settlement Price specifically refers to the Current Auction (excluding advance/secondary market prices), uses the Auction Reserve Price if undersubscribed, converts Canadian dollar prices to USD, and only considers corrections issued before the market's expiration time.

Market Discussion

Limited public discussion available for this market.

5. How to Determine CCA Futures VWAP and Open Interest Trend?

Auction #47 Bid DateTo be determined from CARB's official reports [1]
Relevant Futures ContractCalifornia Carbon Allowance Current Auction Clearing Price (Product ID 71090475) [2]
Data Source for Volume/OIICE Daily & MTD/QTD/YTD Volume and OI reports [3]
Analyzing CCA futures involves defining the period and identifying the correct contract. To determine the Volume-Weighted Average Price (VWAP) and the trend in open interest for the nearest-expiration California Carbon Allowance (CCA) futures contract leading up to Auction #47, the first step is to identify the official bid date for Auction #47 from the California Air Resources Board's (CARB) Auction Notices and Reports [1]. This date is crucial for establishing the two-week period immediately preceding the auction. The specific contract of interest is the California Carbon Allowance Current Auction Clearing Price futures, listed on ICE under Product ID 71090475, which is designed to settle against the official CARB auction clearing price [2].
Data extraction from ICE reports enables precise VWAP calculation. Once the two-week period is established, daily data for the relevant futures expiry corresponding to Auction #47 must be extracted from ICE's Daily & MTD/QTD/YTD Volume and OI reports [3]. For each day within this period, the total volume, settlement prices, and open interest figures are needed. The VWAP is calculated by summing the product of each day's settlement price and its total volume, then dividing this sum by the cumulative total volume for all trading days within the defined two-week window.
Open interest trends reveal market sentiment preceding the auction. The trend in open interest is determined by directly observing the daily open interest figures from the ICE reports [3] over the same two-week period. This observation reveals whether open interest consistently increased, decreased, remained stable, or showed significant volatility, providing insight into market participation and sentiment leading up to Auction #47.
Sources (3)
  1. 1Auction Notices and Reports | California Air Resources Boardww2.arb.ca.gov
  2. 2California Carbon Allowance Current Auction Clearing Priceice.com
  3. 3ICE Daily & MTD/QTD/YTD Volume and OIice.com

6. How Did Compliance vs. Financial Entities Purchase Allowances in CARB Auction #46?

Auction #46 Purchasing Ratio5.08:1 (February 2026 Joint Auction #46 Summary Results Report [1])
Historical Average Purchasing Ratio4.16:1 (February 2026 Joint Auction #46 Summary Results Report [1])
Auction #46 Compliance Entity Purchases50,215,800 allowances (February 2026 Joint Auction #46 Summary Results Report [1])
Mandatory compliance entities significantly outpurchased financial participants in Auction #46. For the California Air Resources Board (CARB) Joint Auction #46, mandatory compliance entities purchased approximately 50,215,800 allowances. In contrast, purely financial and speculative participants acquired around 9,876,200 allowances [1]. This indicates that compliance entities bought allowances at a ratio of approximately 5.08:1 compared to purely financial/speculative participants in Auction #46.
Auction #46's purchasing ratio exceeded the four-auction historical average. The 5.08:1 purchasing ratio observed in Auction #46 was higher than the four-auction historical average of approximately 4.16:1 [1]. This historical average reflects compliance entities purchasing about 48,123,000 allowances and financial participants purchasing about 11,567,000 allowances over that period. The stronger ratio in Auction #46 suggests that mandatory compliance entities accounted for a larger share of the purchased allowances relative to financial/speculative participants compared to the recent historical trend [1].
Sources (1)
  1. 1February 2026 Joint Auction #46 Summary Results Report | California Air Resources Boardcarbstage.arb.ca.gov

7. What's California's Natural Gas Consumption and Hydroelectric Reservoir Status?

Natural Gas Consumption (Nov 2023)107,370 MMcf [1]
Utility-Scale Nat Gas Generation (Jan 2024)6,105 thousand MWh [2]
Lake Oroville Capacity (June 2024)88% of capacity, 96% of average [3]
California's natural gas consumption significantly impacts carbon allowance demand from utilities. In November 2023, the state's electric power sector consumed 107,370 million cubic feet (MMcf) of natural gas, with the annual total for 2022 reaching 1,180,601 MMcf [1]. Utility-scale net generation from natural gas amounted to 6,105 thousand megawatt-hours (MWh) in January 2024 [2]. These trends are crucial for understanding allowance demand, as higher reliance on natural gas typically results in increased carbon emissions and a corresponding rise in the need for carbon allowances from utilities.
Robust hydroelectric reservoir levels signal reduced natural gas electricity generation. California's major hydroelectric reservoirs showed strong conditions in early June 2024 [3]. Lake Oroville, a significant part of the State Water Project, was at 88% of its capacity and 96% of its historical average [3]. Shasta Lake, the state's largest reservoir, stood at 88% of capacity and an impressive 109% of its average, while Folsom Lake was at 91% of capacity and 103% of average [3]. Elevated hydroelectric reservoir levels usually lead to increased hydroelectric power generation, which can decrease the demand for natural gas-fired electricity and, consequently, reduce short-term allowance demand from utilities.
Sources (3)
  1. 1California Natural Gas Summaryeia.gov
  2. 2Electric Power Monthly - U.S. Energy Information Administration (EIA)eia.gov
  3. 3STORSUMcdec.water.ca.gov

8. What are the Latest Updates on California Cap-and-Trade Stringency?

CARB Chair's Statement DateMay 7, 2024 [1]
Public Comment Period StartApril 18, 2024 (for 15 days) [2]
Legislative Debate on FlexibilityOngoing (within last 90 days) [3]
CARB officials signal openness to adjustments in cap-and-trade program stringency. California Air Resources Board (CARB) Chair Lauren Sanchez stated on May 7, 2024, that there is "time for changes" to the proposed update for the cap-and-invest regulation, acknowledging concerns about its sufficiency to meet climate goals [1]. The current proposal aims for emissions reductions of 48% below 1990 levels by 2030 and 85% by 2045 [1]. Reinforcing this active review process, CARB initiated a 15-day public comment period on April 18, 2024, for modified text concerning amendments to the cap-and-invest regulation [2].
Lawmakers express divided opinions regarding cap-and-trade program flexibility and strength. Within the last 90 days, legislative voices have contributed to the public discussion on cap-and-trade stringency. On February 21, 2024, some California lawmakers publicly requested "more flexibility" in the carbon market rewrite [3]. Conversely, other Democratic legislators publicly opposed a "weakened" California cap-and-invest plan on February 13, 2024, advocating for stronger measures to ensure effective climate target achievement [4]. These varied legislative perspectives, alongside CARB's ongoing rulemaking and public comment periods, collectively demonstrate active consideration of adjustments to the post-2030 cap-and-trade program's stringency.
Sources (4)
  1. 1Air board chair says there is time for changes to controversial cap and invest updatekcra.com
  2. 2Public Availability of Modified Text and Additional Documents and Information for the Proposed Amendments to the to the Regulation for the California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanismscontent.govdelivery.com
  3. 3California lawmakers call for more flexibility in carbon market rewrite - E&E News by POLITICOeenews.net
  4. 4Democratic legislators oppose weakened California cap-and-invest plan - E&E News by POLITICOeenews.net

9. How Does the 2024 Auction Reserve Price Compare to Market Thresholds?

2024 Auction Reserve Price$22.21 [1]
Market's Threshold$27.94 [1]
Joint Auction #46 Settlement Price$41.06 [2]
The official Auction Reserve Price set by the California Air Resources Board (CARB) for 2024 is $22.21, serving as the minimum bid for cap-and-trade allowances [1]. This 2024 reserve price stands $5.73 below the current market's threshold of $27.94. This difference indicates that the market's perceived value for allowances is currently higher than the established minimum bid floor.
Recent auction settlement prices surpass the current market threshold. The market's $27.94 threshold is significantly lower than actual settlement prices from recent CARB joint auctions. For instance, Joint Auction #45 in November 2023 settled at $32.70 for various vintage allowances [3]. More recently, Joint Auction #46 in February 2024 saw settlement prices climb to $41.06 for both vintage 2024 and 2027 allowances [2].
Sources (3)
  1. 1California Air Resources Boardww2.arb.ca.gov
  2. 2California and Quebec release summary results from 46th joint cap-and-invest allowance auction | California Air Resources Boardww2.arb.ca.gov
  3. 3California and Quebec release summary results from 45th joint cap-and-trade allowance auction | California Air Resources Boardww2.arb.ca.gov