Complying with a state-imposed mandate to curb carbon emissions, California companies shelled out another $297 million this week for the right to spew greenhouse gases, according to auction results released Friday.
All of the carbon permits that were up for auction were sold, the California Air Resources Board reported.
The auction, held Tuesday, was the fifth in the state’s year-old “cap-and-trade” program, which is designed to curb greenhouse gases. Cap and trade is the centerpiece of AB 32, the state’s climate-change law, and imposes carbon emission limits on more than 400 of the state’s oil refiners, food processors and other large industries.
One group of carbon permits, which can be used right away, sold for $11.48 a ton. A second group, which can’t be used until 2016, sold for $11.10.
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The auction came a week after a Sacramento Superior Court judge dismissed a pair of lawsuits challenging the legality of the state-run sales. The California Chamber of Commerce and the conservative Pacific Legal Foundation say the auctions amount to an unconstitutional tax on business, and have said they will appeal the judge’s ruling.
Most of the carbon permits are issued for free, but some are being auctioned off in order to create economic incentives to reduce emissions. Although prices have steadily declined in the past several months, environmental groups say the California market is functioning well.
“We’ve proven to the world that a viable, strong carbon market is achievable,” said Emily Reyna of the Environmental Defense Fund in a prepared statement.
Business groups, though, say the market price of carbon is nothing to cheer about. Aside from the legality of the auctions, the California Chamber has said the state-imposed cost of emitting carbon is becoming a serious drag on the business climate.
Including this week’s results, the five auctions have raised a combined $1.4 billion.