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California Tests Cap and Trade System

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(Sacramento, CA)
Thursday, August 30, 2012

The main goal of the test run is to make sure the software works smoothly and prevents attempts to game the bidding system.   

Stanley Young is with the California Air Resources Board, which ran the practice auction for 150 participants.

YOUNG: "We learned from what happened and what was successful in other auction platforms, such as in the European market and in the Northeast with the regional greenhouse gas initiative, and we've taken those lessons to heart."

Part of the challenge with cap and trade markets is how prices are set for the carbon credits.  Too low, and it's inexpensive for companies to pollute.  Too high, and companies face too heavy a burden.  

So far, Young says the state is pleased with the trial auction, though the board won't complete it's full analysis until next week.

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