Nichols Says Rail ‘Legitimate’ Use of Some Carbon Revenue

The construction of a high-speed rail line connecting California’s biggest cities would be a “legitimate” use of some revenue generated from the state’s auctions of carbon allowances, the state’s air chief said.

Using all of the money generated from the sale of carbon permits for the rail project is “not the intent” of California’s carbon program, Mary Nichols, chairwoman of the state’s Air Resources Board, said during a renewable energy conference in San Francisco today. Each permit allows for the release of one metric ton of emissions in the state.

California Governor Jerry Brown is counting on revenue from the carbon program to help pay for the multibillion-dollar rail line eventually linking San Francisco to Los Angeles. A legislative review panel in January questioned the project’s long-term funding and recommended against selling debt to start construction.

California carbon permits for December 2013 delivery slipped 25 cents to $15.20 a metric ton, data compiled by CME Group Inc.’s Green Exchange shows. Prices are down 25 percent from this year’s high of $20.25 a metric ton in July.

The Air Resources Board is scheduled to hold an auction of permits for the first two phases of carbon program on Nov. 14. It will sell at least 21.8 million permits for the first phase of the program starting in 2013 and at least 39.5 million for the second phase beginning in 2015, according to an agency notice Sept. 14.

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