California and Quebec, which together run North America’s biggest carbon market, sold out of greenhouse-gas allowances at $12.29 each, 19 cents above the minimum price.
Agencies received 1.16 bids for each allowance on sale May 21, the California Air Resources Board said Thursday on its website. Units of companies including Chevron Corp., Exxon Mobil Corp. and Morgan Stanley qualified to participate. Polluters buy allowances, each permitting the release of a metric ton of carbon-dioxide equivalent, to cover emissions. The lowest price allowed for them, known as “the floor,” was set at $12.10.
The cap-and-trade programs operated by California and Quebec are designed to shrink greenhouse-gas emissions contributing to higher temperatures, rising sea levels and worsening fires and droughts. Last week’s auction marks the third that the two governments have held together since linking carbon markets last year and the second since they started capping pollution from transportation fuels.
A sale in February cleared at $12.21 each. About 76.9 million allowances were auctioned this month, along with 10.4 million permits that can be used as early as 2018.
The 2018 allowances cleared at the $12.10 floor price, since the governments received less bids than the total that were put up for sale.
California has capped greenhouse-gas emissions from industrial polluters since 2013 and began imposing limits on transportation fuel suppliers on Jan. 1. Companies must either collect enough allowances by trading with one another to cover their emissions or find a way to curb their pollution.
The total allowances available shrink with the cap over time to achieve a roughly 15 percent reduction in gases by 2020.
Last month, California Governor Jerry Brown issued an executive order establishing a new emissions target of 40 percent below 1990 levels by 2030. It builds on an already-existing state goal of reaching 1990 levels by 2020.
During the allowance auctions, 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.
By Lynn Doan