Tuesday, November 20, 2012

CARB & EDF Say First Cap-And-Trade Auction A Success

Nov 19: A release from Environmental Defense Fund (EDF) and a summary information from the California Air Resources Board (CARB) provide and overview and results from California's first cap-and-trade auction held last Wednesday, November 14 [See WIMS 11/14/12]. EDF indicates that the CARB summary report demonstrates that the auction was transparent and fair, with oversight mechanisms in place to ensure the integrity of the auction. The California cap-and-trade program [See WIMS 12/17/10]. California's program will be second in size only to the European Union's Emissions Trading System (EU-ETS) based on the amount of emissions covered [See WIMS 10/31/12].
    According to the information, both vintage years 2013 and 2015 carbon allowances were available at auction at a floor price of $10.00 per allowance. One hundred percent of the 23,126,110 vintage 2013 carbon allowances were sold at a settlement price of $10.09 each, while 5,576,000 of the 39,450,000 vintage 2015 carbon allowances were sold at a settlement price of $10.00 each.

    Nathaniel Keohane, Vice President (and former Chief Economist) for EDF said, "This inaugural auction was a successful first step in setting a fair price on carbon. The demand for 2013 allowances was greater than the supply, showing that businesses are ready to be active participants in cleaning up California's air." The auction set into motion a robust carbon market that will aid California in achieving its climate change pollution goals in a cost effective manner. By establishing a price on carbon, the new market gives regulated industries a market incentive to find innovative solutions to reduce their pollution.

    Timothy O'Connor, EDF's Director of California Climate and Energy Initiative said, "The smooth execution of this first auction paves the way for a cleaner California. With cap and trade, Californians don't have to choose between the environment and the economy. It will attract more investments in clean energy, keep California competitive, and reduce our dependence on foreign oil."    The next allowance auction is scheduled for February 2013. Quarterly auctions, combined with as needed cost containment reserve sales of allowances, will ensure sufficient opportunity for bidders to obtain the allowances they will need for compliance.
    CARB Chairman Mary Nichols issued a brief statement on the auction saying, "The auction was a success and an important milestone for California as a leader in the global clean tech market. 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."
    On November 16, the Los Angeles Times published an article indicating that a USC Dornsife/Los Angeles Times poll of 1,520 registered California voters indicated strong support for the State's ambitious program to limit emissions of carbon dioxide and other greenhouse gases that cause global warming. The poll, conducted from Nov. 7 to 12, indicated 63% said the law is needed and 32% said the state can't afford it, while 5% had no opinion. The poll was conducted by Greenberg Quinlan Rosner Research, a Democratic firm, and American Viewpoint, a Republican company. The margin of sampling error is 2.9 percentage points.
    On November 13, the California Chamber of Commerce filed a lawsuit seeking to invalidate California's "cap and trade" auction arguing that CARB exceeded the authority granted to it under AB 32 in establishing the revenue raising program. The complaint, filed in Sacramento Superior Court, asserts that AB 32 does not authorize CARB to impose fees other than those needed to cover ordinary administrative costs of implementing a state emissions regulatory program. The complaint states, "What was not authorized by AB 32 is the Board's decision to withhold for itself a percentage of the annual statewide greenhouse gas (GHG) emissions allowances and to auction them off to the highest bidders, thus raising from taxpayers up to $70 billion or more of revenue for the state to use."
    According to a release, CalChamber, other members of the business community, members of the Legislature, the Legislative Analyst's Office and CARB have all highlighted the fact that the auction is not needed to achieve the goals of AB 32. The business community has repeatedly underscored the fact that the auction will raise energy costs significantly in the state, harm the economy and impact California's competitiveness, without providing any additional environmental benefits. Allan Zaremberg, President and CEO of the California Chamber of Commerce said, "AB 32 gives California the opportunity to be the leader in reducing carbon emissions. Unless we adopt the most cost effective way of reducing carbon emissions, other states will not follow us. The current CARB proposal is the most costly way to implement AB 32 and it will hurt consumers, the job climate, and the ability of businesses to expand here."
    In a related matter, the Carbon Price Communiqué was officially presented to policymakers and representatives of key governments at an event on November 19, in Brussels, co-hosted by the European Commission and The Prince of Wales's Corporate Leaders Group on Climate Change. The Communiqué, signed by over 80 international companies, calls on policymakers to focus on achieving a clear and effective global carbon price as a way of driving substantial reductions in greenhouse gas emissions. It cites the progress made in some advanced developing countries and regions that are starting to implement cap and trade programmes alongside other measures and calls for such measures to be expanded.
    Access a release from EDF (click here). Access the statement from CARB (click here). Access complete information on the auction and the summary report from CARB (click here). Access the LA Times article and link to the details of the poll (click here). Access a release from CalChamber and link to the complaint and other legal documents (click here). Access complete information on the Carbon Price Communiqué including signatories (click here). [#Climate, #Air]
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