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Nation Watches as California Opens Cap-and-Trade Auction

California's cap and trade system kicked off this week, and the ARB will announce results of the auction on November 19. A November 8 Reuters story, "Auction to kick-start California carbon market," quoted analysts that 2013 permits are expected to sell at between $11 and $12 per unit. Leading up to the sale, there has been much discussion over the likely results.

Dallas Burtraw, Senior Fellow and Darius Gaskins Chair, Resources for the Future called the California program “the best-designed program in the world to date” in an Op-ed to the Sacramento Bee, “State’s well-designed cap-and-trade plan will defy cynics.”  The program “is likely to influence the design of emerging programs in Australia, South Korea and even China,” Burtraw wrote.  Among the program’s attributes, Burtraw hailed the adoption of a price floor, a central role for auction, and its transparency.  The program also has designations in place to ensure protection of disadvantaged communities.

In the Huffington Post, Ann Carlson, Shapiro Professor of Environmental Law, UCLA School of Law notes the use of proceeds from the cap and trade auction is undetermined in “California’s Cap-and-Trade May Solve State’s Budget Problems.”  A supermajority of Democrats in the state Assembly and Senate “could reaffirm AB 32 with a 2/3s vote and then could use the auction revenue from cap-and-trade for general purposes,” such as education and other programs, Carlson writes.

The Reuters article presaged lawsuits that could arise after the auction from companies claiming to be damaged by the program, such as out-of-state power producers with coal interests, who would claim violation of a U.S. Constitution dormant commerce clause and appeal to a federal court.  

But in an article from InsideClimate News, “California’s Model Climate Policies Will Maintain Momentum in Obama Second Term,” Maria Gallucci notes that an Obama White House could provide “steady support from the top,” perhaps leading to other states joining the initiative or forming their own.  California is expected to link its cap-and-trade program to Quebec’s carbon market in 2013.

This article was originally published in GEA's Geothermal Energy Weekly and was republished with permission.

Lead image: California flag via Shutterstock

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