CALIFORNIA, USA — It has been a long time coming, but finally the United States has started creating a market to tax pollution.
The Environmental Defense Fund says:
The California Air Resources Board (CARB) released the results from California’s first cap-and-trade auction held last Wednesday, November 14. The CARB summary report demonstrates that the auction was transparent and fair, with oversight mechanisms in place to ensure the integrity of the auction.
Both vintage years 2013 and 2015 carbon allowances were available at auction at a floor price of $10.00 per allowance. One hundred percent of the 23,126,110 vintage 2013 carbon allowances were sold at a settlement price of $10.09 each, while 5,576,000 of the 39,450,000 vintage 2015 carbon allowances were sold at a settlement price of $10.00 each.
“This inaugural auction was a successful first step in setting a fair price on carbon,” said Nathaniel Keohane, Vice President (and former Chief Economist) for the Environmental Defense Fund. “The demand for 2013 allowances was greater than the supply, showing that businesses are ready to be active participants in cleaning up California’s air.”
The auction set into motion a robust carbon market that will aid California in achieving its climate change pollution goals in a cost effective manner. By establishing a price on carbon, the new market gives regulated industries a market incentive to find innovative solutions to reduce their pollution.
“The smooth execution of this first auction paves the way for a cleaner California,” said Timothy O’Connor, Environmental Defense Fund’s Director of California Climate and Energy Initiative, who also blogged on the topic. “With cap and trade, Californians don’t have to choose between the environment and the economy. It will attract more investments in clean energy, keep California competitive, and reduce our dependence on foreign oil.”
The next allowance auction is scheduled for February 2013. Quarterly auctions, combined with as needed cost containment reserve sales of allowances, will ensure sufficient opportunity for bidders to obtain the allowances they will need for compliance.