California and Quebec held their first joint carbon auction last week and it was a resounding success, selling out all permits and raising $407 million for the quarter.
Industrial polluters bought all 34 million permits, each giving them the right to put a ton of carbon into the atmosphere, for $12.10.
Finishing its second year, the auctions are the centerpiece of California’s successful cap and trade program. Quebec joined the program on January 1, 2014. When Quebec held its own auction in 2013, only a third of permits sold, and at a lower price of $10.75, because of lack of demand.
Now called the Western Climate Initiative, California and Quebec are actively looking for other states and provinces to join, such as Oregon, Washington, Ontario and northeastern states. The more participants, the stronger the program because it covers more sources of emissions, giving companies more opportunities to trade.
The program is expected to bring in $5 billion a year to California by 2016 and almost $3 billion for Quebec by 2020, all of which supports efforts to reduce emissions and move to renewable energy.
So far, only stationary emissions sources have to pay to pollute – utilities, manufacturers and food processors. Next year, it includes mobile sources – all 14 refineries will have to pay for emissions tied to fuel sales across the state. Individuals can also buy and sell carbon permits.
As you can imagine, the petroleum industry is up in arms about that and is working on all-out attack.
On the east coast, RGGI’s 26th auction also sold out, with power plants buying 18.2 million carbon permits for a total of $94 million ($5.21 per ton, up from $5.02 in the previous auction). That brings the cumulative proceeds to $1.9 billion.
Read our article, How California Will Spend the $5 Billion a Year From Cap-and-Trade.