California's cap-and-trade carbon market holds its second auction today.
The Air Resources Board began auctioning emission allowances totaling about 22 million tons of carbon. Results from the three-hour electronic auction will be announced Friday.
The market is the centerpiece of the state's global warming initiative, AB 32. The state has placed an overall ceiling, or cap, on the amount of carbon that can be emitted annually by the big industrial polluters.
Companies get most of their emissions permits free but have to purchase some, either on the open market or directly from the state in a series of quarterly auctions like today's.
State officials say the market-based approach gives companies flexibility on how to deal with the emissions cap. Companies that find a way to reduce their emissions can sell their surplus allowances to other companies; that gives them a financial incentive to scale back their pollution.
But big business groups call the market a thinly-disguised carbon tax that will cost companies at least $1 billion a year. The market is being challenged in court by the California Chamber of Commerce.