Edison Mix-Up Skews CARB Auction Demand
California sold all of the carbon permits in its first auction in part due to an administrative error by Edison International that caused the company to bid for twice as many allowances as were for sale, Bloomberg reports.
Edison, which owns the state’s second-largest power utility, submitted its bid proposal in the wrong format and accidentally offered to purchase 21 times more allowances than it wanted, the news service reports.
This situation has, understandably, skewed demand figures. In November, California’s Air Resources Board announced results of the cap-and-trade program’s auction. The regulator said that it raised nearly $300 million from the auction, with emitting businesses paying $10.09 per metric ton for the right to release carbon in 2013. At the time, the board said that all of the 23.1 million permits offered at the auction to cover 2013 emissions were purchased and bidding was described as heavy. The board did not mention that Edison accounted for 72 percent of all bids, Bloomberg reports.
Had the company submitted its bid in the correct format around 225,000 permits would have gone unsold, Bloomberg has calculated.
The board refused to allow Edison to resubmit its proposal.
The run-up to the auction was also beset with issues. The state’s first auction was delayed twice. Meanwhile, protests from the business community increased as the auction date drew closer. A number of business groups including the Western States Petroleum Association launched a petition drive calling on Gov. Jerry Brown to stop the November 14 auction.
Backers of the cap-and-trade system believe it will reduce emissions and possibly be a blueprint for the rest of the nation. Opponents, however, argue it could drive refiners, cement makers and other large emitters to leave the state, causing economic strain.
The California Chamber of Commerce filed a last-minute lawsuit prior to the auction. CalChamber argued the California Air Resources Board, or CARB, exceeded the authority granted to it under AB 32, the global warming bill signed into law by former governor Arnold Schwarzenegger in 2006.
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