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November 20, 2012
Results of CA's first CO2 allowance auction

All 23,126,110 of the 2013 vintage CO2 allowances offered in the nation’s first economywide GHG auction were sold, reported the California Air Resources Board (CARB) on Monday following the November 14, 2012, inaugural event.  Also, about 5.5 million of the 39.5 million 2015 vintage allowances were sold.  Vintage refers to the year the allowances can first be used for compliance purposes.  One allowance permits release of 1 metric ton of CO2. 

The auction is a product of California Assembly Bill (AB) 32, which was signed into law in 2006 and empowered state environmental agencies to undertake measures to reduce the state’s GHG emissions to 1990 levels by 2020 and to 80 percent below 1990 levels by 2050.  In addition to a GHG cap-and-trade program, which CARB claims is the basis of the auction, other measures authorized by AB 32 include a low-carbon fuel standard, advanced clean cars, a renewables portfolio standard, energy efficiency, and sustainable communities.  Starting in 2013, CARB will hold four allowance auctions each year. 

$91 high bid

Compliance entities–an entity that emits more than 25,000 metric tons of CO2 per year and therefore is subject to CARB’s CO2 cap-and-trade regulations–purchased 97 percent of the 2013 vintage allowances at the auction and 91 percent of the 2015 vintage allowances sold.  The auction reserve price–i.e., the minimum acceptable bid price for the allowances offered for sale–was $10.  CARB reported a high bid price of $91.13 for 2013 vintage allowances and a $13.75 mean (average) price. The maximum price for 2015 vintage allowances was $17.25, with a mean price of $11.07.  A total of about $289 million was spent on allowances, roughly $233 million for 2013 and $56 million for 2015. 

CARB released a list of purchasers but did not divulge the number of allowances purchased by individual entities or how much they paid. Energy companies made up more than half the purchasers, reported CARB, followed by oil and gas companies, manufacturers, and brokerages and commodity management firms. 

“Milestone” event

“The auction was a success and an important milestone for California as a leader in the global clean tech market,” said CARB Chairman Mary D. Nichols.  “By putting a price on carbon, we can break our unhealthy dependence on fossil fuels and move at full speed toward a clean energy future.  That means new jobs, cleaner water and air–and a working model for other states, and the nation, to use as we gear up to fight climate change and make our economy more competitive and resilient.”

Click here to read CARB’s summary of the auction results.

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