Demand rebounds for pollution permits

SACRAMENTO — Demand for California pollution permits rebounded in the first quarterly auction since an appeals court upheld the program, generating about $500 million for the state, according to results released Wednesday.

The California Air Resources Board reported that it sold out of permits to release greenhouse gases during 2017 or later. The demand exceeded the total supply for the first time since 2015, pushing prices above the minimum.

However, demand remained skimpy for permits that allow pollution in the future as the Legislature debates whether to continue the cap-and-trade program beyond 2020. About 22 percent of those permits were sold.

“The debate is adding to a sense of political uncertainty about what’s going to happen in 2021, and that is depressing market sentiment,” said Chris Busch, research director at Energy Innovation, a San Francisco company that analyzes climate policies.

The cap-and-trade program is one of California’s highest-profile efforts to reduce greenhouse-gas emissions. Under legislation approved in 2006, the state caps annual carbon emissions and sells permits giving companies the right to release carbon into the atmosphere. Companies can buy permits at auction, trade them with other companies and investors, or reduce their emissions.