California may have lost up to $3 billion in potential revenue from a signature emissions reduction program over the past year, a new report has found.

The Golden State’s cap-and-trade program — a system that sets emissions caps and distributes tradable credits within that framework — has incurred these losses in response weak auction results, according to the report, published on Monday by nonprofit research group Clean and Prosperous California.

The poor auction outcomes stem from a plunge in so-called “allowance prices,” the cost of the permits that polluters can purchase in exchange for emissions they generate.

Allowance prices have plummeted from an........

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