The state of California is being sued by the California Chamber of Commerce stemming from the state’s plan to auction off carbon allowances. That auction marks a crucial part of the state’s intention to reduce greenhouse gas pollution in its jurisdiction. The Chamber of Commerce initiated its business litigation in state court, alleging that the auction would constitute an unconstitutional fee or inappropriate tax.
The state, on the other hand, issued a statement indicating that it had no intention to call off its planned auction. Some industry insiders believe that putting off the state’s first auction could spell further trouble for an already weak market as far as carbon futures go. The rates for 2013 carbon allowances have already fallen substantially just since the start of August because of various issues such as rule changes, legal threats and political opposition.