California Sells Out Of Pollution Permits

As the Wall Street Journal explains:

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 year-by-year.

The final price for 2013 allowances was just nine cents above the $10 minimum price set by regulators.

However, not everyone approves of cap-and-trade.

No surprise here: petroleum refiners, manufacturing companies and other industries have spoken out strongly against the program, calling it an illegal tax that will hurt California’s economic recovery.

The California Chamber of Commerce last week filed a lawsuit seeking to invalidate the cap-and-trade auction, arguing that the Air Resources Board exceeded the authority granted under AB 32.

But they may well be outnumbered. As Rob Day of Black Coral Capital in Boston explains:

“The price of carbon matters, but the price is going to change over time. It’s more important to me to see that there was an appetite for these credits,” Day said. “This is a robust market. It’s real. It’s not going away. California is pricing carbon, and companies are saying, ‘I need to start paying attention to my carbon footprint.’ “

Good for California!

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