California's first-in-the-nation carbon auction market had a promising inaugural year, according to a report by the Environmental Defense Fund.
The centerpiece of a 2006 law aimed at curtailing greenhouse gas emissions to 1990 levels by 2020, the cap-and-trade program allows industry to purchase carbon allowances. The "cap" refers to an overall ceiling on emissions, with companies able to obtain a finite number of permits that together fall below that limit. The ceiling will lower over time.
Over the course of five auctions, California sold 142 different entities the total available stock of allowances for 2013 - some 117 million, the report found. That added up to a $1.37 billion surge of revenue.
Power suppliers accounted for nearly half of the purchases, the report found, while the oil industry combined with food and agriculture to vacuum up another quarter of the allowances.
By law, that money must be spent in ways that reduce emissions. It promises to be a politically fraught process, illustrated by Gov. Jerry Brown's plan to use a chunk of the proceeds to pay for his troubled high-speed rail project.
A recent projection from Lawrence Berkeley National Laboratory found that California is on pace to thin the air to 1990 levels by 2020. Hitting a separate, more stringent target set out in a 2005 executive order issued by Gov. Arnold Schwarzenegger remains a challenge.
PHOTO: Union oil company refinery in Rodeo, Tuesday, December 17, 2002. The Sacramento Bee/ Michael A. Jones.