After six years of planning, California moved forward Wednesday with the nation's first auction of greenhouse gas pollution credits.

The bidding and buying began at 10 a.m. and closed at 1 p.m. There was no jam-packed auction house or frenetic trading floor: Bids were placed quietly and electronically, from computers around the country.

Results of the auction -- including how many qualified bidders participated, the settlement price on carbon and the number of allowances sold -- are expected to be made public Monday by the California Air Resources Board.

Several business groups, including the California Chamber of Commerce, remain opposed to the program, complaining that it's a hidden tax. The chamber filed a lawsuit Tuesday seeking to invalidate the cap-and-trade auction.

But environmentalists and state policy leaders hailed the auction as the launch of the first large-scale carbon market in the United States, and one that is expected to be the second-largest carbon market in the world after the European Union.

"The world is watching California mark this historic milestone," said Alex Jackson, an attorney with the Natural Resources Defense Council. "The launch of the nation's first economywide carbon market emphasizes once again California's continued leadership in developing innovative energy policies."


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Under California's cap-and-trade program, any business that emits more than 25,000 metric tons of carbon dioxide or other greenhouse gases is affected. Chevron, Calpine and Valero are among the 360 businesses -- most of them oil refineries, power plants, cement companies and large food processors -- representing 600 entities that are covered. Several companies contacted Wednesday declined to say how the auction went, or even if they participated.

"The companies that are participating are not saying whether they are participating because it's a market strategy," said Gary Gero of the Climate Action Reserve, a nonprofit group that tracks greenhouse gas emissions. "This is the very start of a long-term market. I would be surprised if everyone participates in the first auction. A lot of them will sit on the sidelines and wait and see what develops."

California will hold four auctions a year until at least 2020; the next one is in February. Under the law, companies must have one permit, or allowance, for each metric ton of greenhouse gases they emit. California initially will provide 90 percent of the permits for free to reduce the burden on businesses, but that percentage will decline over time. Utilities like PG&E and Southern California Edison were given all of their allowances for free. As polluters reckon with the new mandate to reduce emissions, some may buy their way to compliance. But far more seem to be focusing on efforts to reduce their greenhouse gas emissions through technological innovation and energy efficiency, particularly since the price of carbon is expected to rise.

If the system works as designed, the most efficient companies will be financially rewarded, polluters will pay and greenhouse gases will be dramatically reduced.

California originally hoped to partner with several other Western states on a regional cap-and-trade program, but one by one the other states pulled away amid the recession and 2010 elections. But several of those states are closely watching California, and for the first time Wednesday, the governors of Oregon and Washington, along with the premier of British Columbia, collectively voiced support for pricing carbon in a joint statement issued with Gov. Jerry Brown. The idea of a carbon tax has been floated in the wake of Hurricane Sandy but seems unlikely to be enacted at the national level.

The auction is expected to generate $500 million to $1 billion of revenue in the first year, but that amount is expected to grow in coming years. Those revenues will fund climate-related programs, with 25 percent committed to benefiting disadvantaged communities.

Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.