California raised $630 million by selling pollution allowances one Wednesday last month, each of them entitling the buyer to harm the climate with a ton of carbon dioxide. Most of the money that was raised during the quarterly allowance auction will be used to reduce customers’ electricity bills; the rest will go to environmental projects. That same Wednesday, the Canadian province of Quebec raised $150 million doing the exact same thing.
The timing was no coincidence. The auction was held jointly. It was the result of the historic linking of two cap-and-trade programs operating in different nations, thousands of miles apart. A refinery in Richmond, Calif., can now buy its pollution allowances from Quebec. In lieu of buying an allowance needed to release a ton of carbon dioxide, a power plant operating on the banks of Quebec's Saint Lawrence River could buy an offset from a Central Valley dairy farm that kept an equivalent amount of methane out of the atmosphere.