California sells out of first pollution permits

Associated Press Modified: November 19, 2012 at 7:16 pm •  Published: November 19, 2012
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SAN FRANCISCO (AP) — California sold out of the first pollution permits issued as part of a landmark offensive against greenhouse gases at an inaugural auction that regulators said Monday 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 last week opened the largest carbon marketplace in the nation and the second-biggest in the world after the European Union. The California air 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 during a conference call with reporters.

The board would not divulge specific figures on how many permits were bought by individual polluters covered under newly instituted caps on carbon emissions. The board does not comment on bidding activity to protect each polluter's strategy regarding use of the carbon market, Nichols said.

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." He said he couldn't comment on whether PG&E participated in the auction due to restrictions in the cap and trade regulations.

The board said participation in the auction was robust, with three times more bids submitted than allowances available for sale.

Robert Day, a partner at Boston-based clean tech investment firm Black Coral Capital, said the high number of bids showed that California's carbon market is legitimate.

"As an investor, I take a lot of comfort that this was for real, was done right and will continue into the future," Day said

The permits are part of California's so-called "cap-and-trade" program — a central piece of the state's 2006 global warming regulations seeking to dramatically reduce emissions of heat-trapping gases.