California-Quebec Carbon Auction Sells Out at $12.10Lynn Doan
California and the Canadian province of Quebec, which together run North America’s biggest carbon market, sold greenhouse-gas allowances for $12.10 each in their first joint auction last week.
The two governments received 1.73 bids for every allowance that was on sale Nov. 25, the California Air Resources Board said in a notice on its website today. Units of companies including BP Plc, Exxon Mobil Corp. and PG&E Corp. qualified to participate in the auction.
California and Quebec held the sale last week after their first attempt failed on Nov. 19 due to a system error that prevented some companies from bidding for allowances. Both governments are working to recruit other states and Canadian provinces to join their system. They linked markets on Jan. 1, allowing companies to trade carbon permits across territories to comply with greenhouse-gas limits.
Almost 23.1 million allowances, each permitting the release of 1 metric ton of carbon dioxide as soon as this year, were on sale. About 10.8 million permits that can be used as early as 2017 were also auctioned. The 2017 allowances sold out at $11.86 each. The governments received 1.92 bids for every one of those up for auction.
During the sales, companies submit confidential bids for the number of allowances they want at a specific price. The highest bidder is awarded permits first, then the second-highest, and so on until the all of the permits for sale have been called for. Then all bidders pay the price of the lowest winning offer.
California’s 2014 carbon allowance futures for December delivery gained 1 cent yesterday to settle at $12.20 a metric ton, data compiled by Atlanta-based Intercontinental Exchange Inc. show.