It was mid-morning one day in May and somewhere deep inside a 25-story tower in Sacramento, an auction, cloaked in secrecy, was about to begin.
State workers surrendered their cell phones and took positions monitoring computer screens inside the building that houses California’s environmental agencies. Across the world, traders logged in, poised to buy permits that allow businesses in California to emit the kind of pollution responsible for global warming.
Four hours later, the auction was over and California state government was $626 million richer.
That’s the state’s cap and trade program at work, the only one like it in the country.
How many staff monitor the online auctions? Which companies bought the permits? State officials won’t say. Making too much information public, they say, could compromise the integrity of the quarterly auctions.
“What we don’t do and won’t do is get into the individual business strategies that companies use to decide when to buy, what auctions to participate in, who to trade with, and so forth,” said Mary Nichols, chair of the California Air Resources Board, which runs the cap and trade program.
The secrecy around the auctions is meant to keep them fair and prevent participants from colluding; other carbon markets use a similar “sealed bid” technique.
Under California’s two-year-old cap and trade system, the state sets a limit on how much greenhouse gases businesses can emit, and reduces the amount each year. Companies decide how to stay below the cap: They can buy permits to pollute through the auction, change operations to use energy more efficiently or pay for “offsets,” which are environmentally beneficial projects somewhere else that allow businesses to continue sending emissions into the atmosphere in California.
Cap and trade is among the most pioneering — yet controversial — elements of California’s multi-layered approach to combating climate change. The program covers most major polluting industries and is generating billions of dollars for the state, money that must be poured into efforts to further reduce greenhouse gas emissions. So far, courts have upheld the approach in the face of legal challenges.
Yet the national reach of the program has fallen short of expectations. One Canadian province has joined and another is working on it, but California remains the only state that charges almost every industry a price for emitting carbon.
It wasn’t supposed to be this way, said former Assembly Speaker Fabian Núñez, who carried Assembly Bill 32, the 2006 measure that led to cap and trade.
“The environmental community said, ‘Look, the reason why this has to be the most progressive bill is because once California passes a law, all of these other states are going to follow suit. All of them,’ ” Núñez said in a recent interview.
“The irony of this is that once the law passed in California, no one followed suit. No one.”
http://www.recordnet.com/article/20150724/NEWS/150729780/101007/A_NEWS