December 6, 2013 / 7:47 PM / 4 years ago

UPDATE 1-Quebec sells carbon-emission permits at C$10.75 a tonne

Dec 6 (Reuters) - Permits to emit greenhouse gases in Quebec sold for C$10.75 per tonne, the minimum bid price, at the Canadian province’s first auction, a component of its response to climate change.

Nineteen companies participated in the auction, which was held on Tuesday, according to a statement from the Quebec government on Friday. The bidders included ArcelorMittal Montreal, Transcanada Energy, HydroQuebec and Glencore Canada.

Auction participants bought 1.025 million permits for the right to emit one tonne of carbon dioxide-equivalent in 2013, out of 2.97 million permits offered.

Participants also bought 1.7 million out of 6.31 million permits for the right to emit one tonne of carbon dioxide-equivalent in 2016 at the minimum bid clearing price of C$10.75 per tonne.

Quebec plans to link its carbon market with California’s year-old cap-and-trade system in January. The two jurisdictions will hold joint auctions later in 2014.

The auction results were termed largely as expected by market participants and officials.

Quebec’s environment minister, Yves Blanchet, said the auction was executed without a hitch.

“The auction generated revenues of more than C$29 million, which is consistent with our expectations. The market works, and it works well,” Blanchet said in a statement.

The result was in line with her expectations, said Samantha Katz, managing director of BGC Environmental Brokerage Services, a company that provides financial services to environmental and green energy markets.

There was “no surprise with the price at the floor. With the account restrictions for who can trade, it was anticipated that participation would be low,” she said in an e-mail.

Erica Morehouse, an attorney with the Environmental Defense Fund, a U.S.-based advocacy group, said the smooth operation of the auction demonstrates that Quebec will be ready to link with the larger California market next year.

“With a today’s auction, Québec now sets the stage for successful linkage with California’s cap-and-trade program and opens the door for businesses to use carbon allowances interchangeably,” she said.

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