Despite projecting over $500 million in proceeds for the state, California’s most recent cap-and-trade auction for greenhouse gases brought in a woeful $10 million, which is less than 2 percent.

Of the 43 million carbon allowances up for grabs, auction-goers only bought 785,000. The money from the sale of carbon credits goes to help fund state programs, one of which is the high-speed rail project. It was expecting $150 million but due to the lower-than-expected auction proceeds, it will get only $2.5 million.

So, why aren’t carbon credits being bought? Some analysts say because of a combination of things, not the least of which are uncertainty about the future of the program, which could expire in 2020, and a pending lawsuit that could upend the whole program. California’s Department of Finance notes that there is a $500 million cap-and-trade reserve built into Governor Brown’s budget. However, the long-term implications of the auction results could also be troubling, as the high-speed rail project needs the funds from selling carbon credits to match the almost $3.5 billion it's receiving in federal grants.​

Guest:

Dan Walters, columnist for the Sacramento Bee