California Carbon Price Hits Record High
All 14.5 million available allowances for use this year sold, the California Air Resources Board says.
The $280 million includes the state’s sale of 7,515,000 carbon allowances for 2016 at the minimum price of $10.71 a metric ton, according to the state.
Californiaâ€™s inaugural auction in November raised nearly $300 million, with emitting businesses paying $10.09 per metric ton for the right to release carbon in 2013. All 23.1 million permits on offer were purchased.
In its second auction, held in February, California raised about $176 million with businesses paying $13.62 per metric ton of carbon, exceeding analystsâ€™ expectations and selling at $2.91 above the reserve price. The Feb. 19 auction sold a little over half as many allowances with a reserve price set 71 cents higher. The price increase is in line with California cap-and-trade regulations, which state that the auction reserve should increase annually by 5 percent plus the rate of inflation.
The three auctions have raised $256 million for the state and $556 million for its largest utility companies, which are required to use the funds to protect ratepayers from higher energy costs, Reuters reports.
Backers of California’s cap-and-trade system say 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.
California’s cap-and-trade scheme has raised the ire of the state’s largest polluters. The Chamber of Commerce and the Pacific Legal Foundation, a conservative legal group, have filed separate lawsuits against the auction, both arguing essentially the same point: the California Air Resources Board exceeded the authority granted to it under AB 32, the global warming bill signed into law by former Gov. Arnold Schwarzenegger in 2006.
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