PG&E Corp., Edison International and Sempra Energy would get carbon-dioxide permits worth hundreds of millions of dollars under California’s cap-and-trade program, according to a plan being considered by state officials.
The owners of California’s utilities would be given the permits for free to help offset higher electricity rates for consumers, according to a staff proposal of the state’s Air Resources Board. The 11-member board is meeting today in Sacramento to vote on a cap-and-trade program that cuts California’s pollution levels by 15 percent from 2012 to 2020.
The board won’t decide how many permits go to individual companies until next year. The staff’s proposal issued today lists “preliminary estimates of allowance allocations” for California’s utilities, which also include municipally owned power providers.
Carbon allowances worth $83 billion will be issued over the nine-year span of the program, and secondary trading of the permits by companies may boost the total value of the California carbon market to $559 billion, according to Bloomberg New Energy Finance estimates.
The pollution allowances, each representing 1 metric ton of carbon dioxide, are likely to be worth $13 each in 2012, rising to $54 by 2020, according to New Energy Finance.
The companies would be required to sell the permits and use the proceeds to help reduce customer bills, possibly through rebates. The permits give the holder the right to emit a certain amount of carbon dioxide, a greenhouse gas blamed for global warming. The state would reduce the number of permits available over time, increasing the value.
PG&E Corp.’s utility Pacific Gas and Electric Co. would get more than 200 million permits during the nine years of the cap-and-trade program, according to the estimates. Edison International’s Southern California Edison would get more than 250 million permits and Sempra Energy’s San Diego Gas & Electric would get more than 50 million permits.
The proposed carbon market is authorized under California’s global warming law, which was signed in 2006 by Republican Governor Arnold Schwarzenegger.