California raised $275.5 million selling greenhouse gas emissions permits in its fourth auction, with the state’s largest emitters paying a lower than expected $12.22 per metric ton for the right to release carbon this year.
All 13.8 million available carbon allowances for use this year sold, the California Air Resources Board says. The carbon price in the Aug. 16 auction was about 12.7 percent lower than the previous sale in May.
The $275.5 million includes the state’s sale of 9.56 million carbon allowances for 2016 at $11.10 per metric ton of carbon, slightly above the $10.71 minimum price. This was the first time the state sold all future-year permits it put up for sale.
California’s inaugural auction in November 2012 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 analysts’ 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.
Its third auction, held in May, was its most successful to date, raising more than $280 million with businesses paying a record $14 per metric ton of carbon.
The four auctions have raised nearly $396 million million for the state. Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric have raised $626 million from the sale of allowances consigned to them by the state.
Supporters 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.
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.