On November 21, CleanStart hosted an engaging discussion with Dr. Mark Trexler, CEO of Climatographers and a leading analyst on climate change policy. Dr. Trexler shared critical insights into the complexities of carbon markets in the U.S. and abroad, shedding light on the challenges and opportunities in the fight against climate change.

Why Carbon Pricing Matters

Dr. Trexler emphasized that the future of carbon reduction hinges on two key factors:

1. The price of carbon allowances or credits
2. The stability of these prices over time

Unlike Europe, where carbon allowance prices have remained relatively steady at approximately $75 per ton, the U.S. lacks a unified national market. Instead, state-led programs dominate the landscape, particularly on the West Coast. These markets, while pioneering, have shown significant volatility.

A Snapshot of U.S. Carbon Markets

• California’s Low Carbon Fuel Standard (LCFS): Prices peaked at over $221 per ton in June 2022 but plummeted to under $45 in May 2024. They have since rebounded to $70 per ton.
• California’s Cap-and-Trade Program: After a long stagnation at $15 per ton, prices surged to $45 in 2021 but have since settled at $30 per ton.
• Washington State’s Carbon Market: Initially fluctuating around $30 per ton, prices climbed back above $50 following the November election, which rejected an initiative to repeal the program.

What Stable Pricing Means for Progress

Dr. Trexler stressed that carbon pricing needs to strike a delicate balance:

• Prices should remain between $50 and $100 per ton to encourage investment without triggering a backlash.
• Stability is crucial to reduce risks for industries making long-term investments in emission-reduction strategies. What needs to emerge is a deep forward market that provides prices for allowances ten or more years into the future.

California’s Air Resources Board is taking steps to tighten carbon emission restrictions, which could drive up allowance prices. However, without a robust forward market to ensure price stability, uncertainty may continue to hinder progress.

A Global Perspective

While U.S. carbon markets struggle with volatility, European carbon allowances offer a more stable model. This steadiness has helped industries in Europe adopt cleaner practices with greater confidence. Could the U.S. learn from this approach?

Looking Ahead

With four decades of experience, Dr. Trexler brings a wealth of knowledge to the discussion. He voiced concerns about potential challenges ahead, including policy shifts under new administrations and legal battles over state-led carbon programs. Despite these uncertainties, he remains optimistic about the role of carbon pricing in driving climate action.

Catch the Full Discussion

Want to dive deeper into Dr. Trexler’s insights? Watch the full recording of the event here. You’ll hear about his thoughts on global trends, policy risks, and actionable strategies for the future of carbon markets.