SACRAMENTO, CA - In an eBay-like auction, California took bids for pollution credits Wednesday from the state's major industrial facilities like oil refineries.
Under the landmark legislation spelled out in AB32, the credits from the cap-and-trade program allow businesses to emit a certain amount of greenhouse gasses. Bidding started at $10 per metric ton, which could net the state budget $1 billion in the first year.
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The new approach aims to stabilize, if not reduce, the effects of global warming.
"We think today is a monumental step forward for California and really, a beacon of hope of the rest of the nation," Environmental Defense Fund spokesperson Tim O'Connor said.
The number of pollution credits gradually diminish and could get more expensive as the allowances become scarce the goal is to have the same levels of greenhouse gasses in 2020, that we did back in 1990.
Companies are forced either to buy more credits if they pollute over their limit or use more green technology so they pollute less.
Either way, business groups argue that it costs money.
"As their prices of doing business goes up, that's going to be passed down to consumers," AB 32 Implementation Group spokesperson Shelly Sullivan said.
The California Air Resources Board estimates when the oil industry is phased in 2015, gas prices will go up 18-cents a gallon.
"That means job loss, business leakage, which means businesses are moving to other states that don't have such stringent regulations," Sullivan said.
State officials won't release information about who bought credits, how many, or at what price, until Monday.
Environmentalists point out the goal is slow the effects of global warming and clean up the air, no matter the cost.
"I certainly think the programs, as designed, has a number of cost control features and designed to promote innovation," O'Connor said. "The program is not going to result in skyrocketing costs."
A lawsuit aims to stop the state from making money from the auction.
The non-partisan Legislative Analyst warned Wednesday that revenues the state is expecting from cap-and-trade may be too optimistic; it could be as much as $400 million off.
By Nannette Miranda, ABC7