On November 14, 2012, the California Air Resources Board
(ARB) held its first auction for the purchase
and sale of carbon allowances for its nascent cap-and-trade regime.
ARB chairwoman, Mary Nichols, declared the auction a success. For a
number of reasons, there is good cause to agree with her. First, a
tonne of carbon for the 2013 vintage year sold for $10.09.
That's slightly above the $10.00 price floor set by the ARB.
The highest bid was a whopping $91.13. Second, there were three
times the number of bidders at the auction than actual buyers,
indicating a healthy and competitive market. Additionally, 97% of
allowances were purchased by entities required to participate in
the regime indicating prices were not influenced by speculative
buyers. Rather, it seems to indicate regulated entities are looking
to retire allowances in anticipation of compliance. Finally and
most importantly, the auction sold out. All 23,126,110 2013 vintage
year allowances were purchased,
