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Base price up for emission allowances

The Feb. 19 auction  of emission allowances, a key piece of California’s law to curb climate-changing greenhouse gases, will carry a slightly higher reserve price than last November’s cap-and-trade auction, the state’s top air-quality regulator told lawmakers on Monday.

 

Mary Nichols, the chair of the California Air Resources Board, said the per-allowance reserve, or minimum bid price, will be $10.71, up 71 cents from the $10 minimum in the first auction. That auction fetched about $285 million, most of it distributed to utilities.

 

The cost of the allowances in part eflects market pressures and it was unknown how much the second auction would bring in.

 

But Nichols sais she was satisfied with the cost of the emission credits. “Actually, we are right about where we should be in terms of the cost of allowances,” she told the Assembly Transportation Committee.

 

The auctions are part of the so-called cap-and-trade regulatory scheme, in which companies are allowed to buy, sell and trade credits, or allowances, to enable them to remain in operation while they cut graduallly ratchet down their emissions. Under AB 32, the state’s law governing carbon emissions from fixed sources, California must reduce its greenhouse gases to 1990 levels during the next seven years.

 

The Feb. 19 auction will offer aboput 12.9 million allowances for 2013, and some 9.6 million allowances for 2016, the ARB said.

 

Nichols also said a series of public workshops would soon be held throughout California to discuss the distribution of the auction proceeds. The proceeds, under legislation carried by the Assembly speaker, will be included in the governor’s revised budget document in May for the 2013-14 fiscal year.

 

The first auction, which took three hours and took place online, brought in $233.3 million from the sale of 23.1 million credits — all that were available — for 2013, plus another $56 million for 2015 from the sale of 5.58 million credits, a fraction of the 39.5 million that were on the block for that year.

 

 

 

 

In the end, the some $289.3 million worth of credits, or allowances, were sold.

 

 

 

The specific buyers and the amounts they paid were not disclosed, but they were among more than six dozen companies that were qualified to participate in the event, the ARB said. Those included petroleum companies such as Exxon, Shell North American, Phillips 66 and BP Energy, all the state’s investor-owned utilities and several agricultural and irrigation interests. A few of the credits, about 3 percent, were bought by traders for later sale.

 

 

 

The final price of the credits, which covers a metric ton of carbon emissions, worked out to $10.09 each. The minimum acceptable price, or reserve price, was $10 apiece. The credits were auctioned off in lots of 1,000 each.

 

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