Six years after the passage of AB 32, the world finally knows what a metric ton of carbon emissions costs in California, when the California Air Resources Board (CARB or Board) released the results of the November 14, 2012, auction. The price is $10.09 per metric ton for 2013, just nine cents above the regulatory "floor." The official results were released via the Board website at noon today. In addition to the "Auction Settlement Price," CARB disclosed other aspects of the auction such how many of the state's obligated entities signed up to participate and how many metric tons were sold.
The interest in the program was evident as the announcing website slowed down considerably when the clock struck twelve. Additionally, there were three bids for every 2013 allowance available for purchase. That being said, there were fewer than 75 entities that signed up to participate for the first auction, which is only a small percentage of the over 350 entities representing over 600 facilities in California.
CARB actually held two separate auctions simultaneously: one for 2013 "vintage" and one for 2015 "vintage." They can be thought of as current and future allowances, as the vintage refers to the first year in which you can use the allowance for compliance with the program. The results are summarized below.
Click here to view the table.
The impact of this price has ripple effects throughout the AB 32 and carbon reduction scheme. It is the benchmark on which the many other pieces of the program will be based, including the cost-effectiveness of industrial efficiency projects, an estimate of the future price-per-gallon increase on transportation fuels, the price of carbon offsets and the viability of future offset projects, and much more.
The AB 32 Cap and Trade auction raised approximately $289 million for California's efforts to reduce GHG emissions. The revenue is already being debated in the Legislature on how it could be spent. How this ultimately occurs will be decided in the state budget process next summer.
The professionals at Manatt are fully engaged in this issue and those issues surrounding California's efforts to reduce greenhouse gases.