In a significant milestone in the evolution of market based approaches to greenhouse gas (GHG) emissions, on November 14 the California Air Resources Board successfully conducted the first auction of permits, also known as emission allowances, under the state’s greenhouse gas emissions reduction program. These permits reflect limits, or caps, on the GHG emissions from power plants, oil and gas refineries, and other large industrial facilities active in California. Starting in 2013, the number of permits will be steadily reduced so that California meets its target of reducing GHG emissions to 1990 levels by the year 2020.
For the first auction, 23.1 million permits were auctioned, at a clearing price of $10.09 per ton of CO2e. The average bid was $13.75. With only 20% of the “compliance entities” participating in this first auction, EOS expects significantly more participation in future quarterly auctions, which will involve sale of several hundred million permits overall.