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Start Your Bidding: Art, Antiques…Emission Permits?

California’s Carbon Auction

You might be picturing a fast-talking auctioneer, rare art and a hushed room with frenzied paddle raising. No one will be taking home a newly discovered Picasso at this auction, but the results will be no less dramatic.

Three hundred and fifty businesses will be vying for “allowances” or permits that allow them to emit carbon dioxide and other greenhouse gases in California’s first-ever carbon auction to be held Wednesday, November 14, 2012. At the end of the day you—and all of us—will take home fewer greenhouse gas emissions without ever raising a paddle.

Carbon Auction Cheat Sheet: Quick Answers for Insanely Busy People

I really am quite busy. Why does this matter?

California, the 8th largest economy and 12th largest emitter of greenhouse gases—if it were a country—is taking action to fight climate change and doing it in a way that provides flexibility for businesses, rewards innovation and reduces costs to you— the end consumer. Yay. Go us!

Well that sounds good. But I’m confused; what exactly is being sold at the auction?

Pollution permits. Industrial businesses are being issued permits that allow them to emit a limited amount of carbon dioxide. 90 percent of these permits are being issued free of charge by the Air Resources Board (ARB). Ten percent are being auctioned.

Fewer permits will be available every year as the amount of carbon dioxide they can emit also goes down. We’re talking about a 2—3% decrease annually in emissions and permits until 2020. And, as fewer permits are available, businesses can purchase “offset credits” that come from urban and forest conservation projects that reduce carbon pollution.

Why is the state auctioning emission permits?

The auction is a part of the state’s program to reduce greenhouse gas emissions. California’s Global Warming Solutions Act of 2006 (Assembly Bill 32) requires California to reduce emissions to 1990 levels by the end of 2020. As part of this “cap-and- trade” program, the state is limiting greenhouse gas emissions and requiring major emitters to pay to pollute if they are going to release more gases than they are allowed.

What’s the value of the allowance permit?

Each allowance is worth one metric ton of carbon dioxide emissions (or greenhouse gas equivalent). The minimum value of each permit will be $10.

Who is buying these permits?

Major industrial facilities that generate approximately 85 percent of the greenhouse gases in the state. This includes electric utilities, gas refineries, paper mills, pharmaceutical manufacturers, food processing plants, steel mills and cement plants.

When will we know results?

The results of the auction will be announced by the ARB on November 19, 2012.

What does this have to do with nature?

We can’t address climate change without saving forests and designing nature-based solutions.

Really, there is no crowded room with a stuffy auctioneer?

Sorry, it’s all done online. Check it out.

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