California sells out of first pollution permits
San Francisco • California sold out of the first pollution permits issued as part of a landmark offensive against greenhouse gases at an inaugural auction Monday.
The effort to curtail carbon emissions involved the sale of 23.1 million permits each allowing for the release of 1 ton of carbon for $10.09 apiece, the California Air Resources Board said.
"By putting a price on carbon, we know we are beginning the process of breaking our dependence on fossil fuels," Mary Nichols, board chairwoman, 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. But a sampling of 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.
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.
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.
About 97 percent of the allowances were bought by companies regulated under the program, and 3 percent were bought by financial traders for later sale.
Petroleum refiners, manufacturing companies and other industries have been outspoken opponents of the program, calling it an illegal tax that will hurt California's economic recovery.