California has sold out of the first pollution permits issued as part of a landmark offensive against greenhouse gases at an inaugural auction in late November that regulators said went smoothly.
The effort to curtail carbon emissions involved the sale of 23.1 million permits — each allowing for the release of one ton of carbon — for $10.09 apiece, the California Air Resources Board said.
The permit sales opened the largest carbon marketplace in the nation and the second-biggest in the world after the European Union. The board will hold four such auctions a year.
“By putting a price on carbon, we know we are beginning the process of breaking our dependence on fossil fuels,” Mary Nichols, board chairman, said.
The board would not divulge specific figures on how many permits were bought by individual polluters covered under newly instituted caps on carbon emissions.
However, a sampling of the more than 300 companies that are covered include utilities such as Pacific Gas & Electric Co., petroleum refiners such as Phillips 66 Co. and even food processing companies such as Saputo Cheese USA Inc.
Blair Jones, a spokesman for Pacific Gas & Electric, said the company is “satisfied with the process based on what we’ve observed,” but wouldn’t comment on whether PG&E participated in the auction.
The board said there were three times more bids submitted than allowances available for sale. The permits are part of California’s so-called “cap-and-trade” program — a central piece of the state’s 2006 global warming regulations. Businesses are required to either cut emissions to cap levels annually, or buy pollution permits called “allowances” from other companies for each extra ton of emissions discharged annually. The cap and number of allowances will decline over time in an effort to reduce greenhouse gas emissions.
The final price for 2013 allowances was nine cents above the $10 minimum price set by regulators.
“The fact that the prices are clearing a little above the reserve is a good sign that people’s fears about out of control costs for cleanup are not justified by the way the market actually worked,” Nichols said.
Petroleum refiners, manufacturing companies and other industries have been outspoken opponents of the program, calling it an illegal tax that will hurt California’s economic recovery. The California Chamber of Commerce has filed a lawsuit seeking to invalidate the program, arguing the board does not have the legal authority to collect money for the state.