North American Carbon
N. AmericaICE (CCA / RGGI)
The other carbon markets: California-Quebec allowances and the Northeast's power-sector RGGI, traded on ICE and separate from Europe's EUA.
The other carbon markets: California-Quebec allowances and the Northeast's power-sector RGGI, traded on ICE and separate from Europe's EUA.
Main Uses
indicative split of allowance holding by purpose
Can it be a contract?
6 of 8 tests passed
- Written grade spec: passes. A published specification a buyer will accept sight-unseen.Published grade specification
- Fungible: partly. Any lot of the grade substitutes for any other.California and RGGI allowances are separate instruments
- Dispatchable: passes. Available at the cadence the buyer needs. Storage is only one route to that; generation and continuous flow are others, which is why power trades without being storable.Available on demand from stock or flow
- Delivery point: passes. A point the trade already uses can stand for the market. A contract cannot invent a delivery location; it has to adopt one the physical flows already run through. The clearest proof that a point qualifies is a liquid basis market against it: every other US gas hub quotes as a spread to Henry Hub, every ISO node settles against its hub, and grades quote as differentials to Brent. Where a point has no basis market quoting off it, it is not really the delivery point.CARB and RGGI registries are the delivery points
- Observable spot price: passes. Somebody publishes or assesses a price the trade recognises.Continuously quoted
- Many on both sides: partly. Enough independent buyers and sellers that no one party sets the price.A smaller set of obligated emitters
- Volatility worth hedging: passes. Prices move enough that someone needs to transfer the risk.Moves enough to need hedging
- Enforceable venue: passes. Contracts can be written and enforced where both sides trust the courts. This is separate from the delivery point and often decides it: Russia and Saudi Arabia sit on enormous, long-established physical flows and no forward settles in either, because the flow test passes and the law test does not.Enforceable in a trusted jurisdiction
Forward market: Yes
The same design as the EU scheme at smaller scale, split across two programmes that do not fungibly trade against each other.
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CCA scope
California-Quebec, economy-wide cap
as of 2025
RGGI scope
Northeast US, power sector only
as of 2025
CCA price
around $40 per allowance
2024
Venue
ICE; 1,000 allowances per contract
as of 2026
Europe's EU ETS is the largest carbon market, but North America runs two of its own, both traded on ICE and both distinct from the European EUA. The bigger is the California Carbon Allowance (CCA), the allowance of the linked California and Quebec cap-and-trade program under the Western Climate Initiative, which caps emissions economy-wide across power, industry, and transport fuels. Each allowance is one tonne of CO2 equivalent; futures trade in lots of 1,000 and are vintage-dated.
The smaller and older is the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade among Northeast and Mid-Atlantic US states that covers only fossil-fuel power plants, not the whole economy. RGGI allowances are cheaper and narrower than California's, and together the two show how US carbon pricing has grown from the bottom up, state by state, rather than through a single federal market.
Prices reflect that difference in scope. CCA traded around 40 dollars an allowance through 2024, while RGGI has run lower, in the high teens to low twenties. Both are cash compliance markets with active futures: covered emitters buy allowances to meet their caps, and the futures let them, and speculators, manage the price of carbon years ahead.
How It Trades
| Venue | ICE (and Nodal Exchange) |
| Benchmark contract | California Carbon Allowance (CCA) and RGGI allowance futures |
| Contract size | 1,000 allowances per contract (1 tonne CO2 each) |
| Price terms | US dollars per allowance |
| Settlement | Physical transfer of allowances via the program registries; vintage-dated |
| Typical curve | Rises with the declining cap and tightening reserve mechanisms; sensitive to policy |
| Liquidity | CCA is the deeper market (record volumes in 2024); RGGI is smaller and power-sector only |
Supply and Demand
Top producers
- Regulators issue allowances: the California Air Resources Board and Quebec (CCA)
- The RGGI states issue power-sector allowances via auction
- Supply is the declining emissions cap, not a mined or grown good
These are policy instruments; "supply" is the regulated cap, which falls over time.
Top consumers
- California and Quebec covered emitters (power, industry, fuel distributors)
- Northeast US power generators (RGGI)
- Financial participants hedging and trading the allowances
Major uses
- Compliance: surrendering allowances against capped emissions
- Hedging future carbon-cost exposure
- Speculative and investment positioning
What Moves the Price
- Regulatory cap trajectories and program reviews
- Auction floor and reserve (price-containment) mechanisms
- Power-sector fuel switching (gas vs coal) for RGGI
- Economic activity and emissions in covered sectors
- Legislative and legal risk to the programs
Moments That Made the Market
2009
RGGI begins, the first mandatory US cap-and-trade, covering Northeast power plants.
2013
California launches its cap-and-trade; it later links with Quebec.
2024
ICE California carbon volume hits a record 3.9 million contracts.
What Changed Since the 2010 Era
- US carbon pricing grew state-by-state rather than federally.
- California carbon became a deep, financially traded market.
- RGGI proved a narrow power-sector cap can work and tighten over time.