California launches the second largest carbon market in the world when it will hold the first-ever cap and trade auction for climate change tomorrow at 10 am PST.
California will … sell more than 60 million CO2 emission permits in a move that will get the world’s second-biggest carbon market off the ground. More than 350 of the state’s biggest emitters, including utilities Pacific Gas & Electric and Southern California Edison, will be bound by the scheme, which aims to help California bring greenhouse gas emissions back down to 1990 levels by 2020.
“We’re ready to go, we’re ready to launch,” Mary Nichols, the chair of California Air Resources Board (ARB), the agency that administers the program, said at Stanford University this week…. ARB will sell 21.8 million allowances that can be used to cover 2013 emissions and 39.5 million allowances that cover 2015 emissions in an auction that could raise over $600 million in cash.
But critics, including trade groups representing manufacturers and oil refiners, continue an 11th-hour push to stop the auction, claiming it is an unnecessary and will raise energy prices.
Lawsuits are expected from other groups soon after the auction, when companies can claim they’ve been damaged by the program. Out-of-state power producers with coal interests who sell electricity to California are among the most likely plaintiffs, legal experts say. They will likely argue that the cap-and-trade program disadvantages their electricity in favour of California sources in violation of a U.S. Constitution dormant commerce clause, and will ask a federal court to put the brakes on the program.
The ARB is already fighting a legal challenge brought by some employees of the Environmental Protection Agency (EPA) who think offset credits should be banned from the program.
The Environmental Defense Fund calls the auction a landmark event and “the best designed cap-and-trade program in the world.” It said: “California has the good fortune of learning from predecessor cap-and-trade programs like the European Union Emissions Trading Platform, the Regional Greenhouse Gas Initiative, and the Acid Rain Program, just to name a few.”
The California program includes auctions four times a year through 2020. Proceeds from the auction will be used for California’s clean energy future to advance the goals of the Global Warming Solutions Act of 2006. Likely project categories include renewable energy, energy efficiency, advanced vehicles and natural resource regulations. One-quarter of the money must be used to benefit disadvantaged communities.