California’s inaugural sale of greenhouse gas permits under the state’s new cap-and-trade system raised nearly $300 million with emitting businesses paying $10.09 per metric ton for the right to release carbon in 2013.
All of the 23.1 million permits offered at the auction to cover 2013 emissions were purchased, raising $233 million, Reuters reported. The auction also included 39.5 million permits that can’t be used until 2015. Only 5.6 million of those sold for the minimum price of $10, raising $55 million, which will be deposited into the state’s Air Pollution Control Fund.
Bidding for the 2013 permits was heavy, but ended with a low final price that was just nine cents above the minimum bid established by the state. Observers suggested the high volume of bids meant companies covered by the state’s cap-and-trade program were taking seriously their need to comply with the system, the San Francisco Chronicle reported.
California officials said the auction was a success, with no reported problems with the electronic trading system and no signs of market manipulation.
The lead up to the auction was shakier. The state’s first auction was delayed twice before it was held earlier this month. 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 Nov. 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 seeking to invalidate the cap-and-trade 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.