State officials insist the economic impact of cap-and-trade will be "flat." (Creative Commons)

In total, 23.1 million permits were sold for $10.09 each. Each permit covers the cost for one ton of carbon emissions. The board had set the minimum price for the permits at $10.

Supporters have argued that the sale of cap-and-trade permits will generate billions of dollars for California, which could then use the money to fund alternative energy. Opponents argue that cap-and-trade would spike the cost of living by forcing businesses to offset the cost of greenhouse gas permits and pass the expenses on to their consumers.

How high will household energy bills go up with the implementation of cap-and-trade? Dave Cleghorn, a spokesperson for the California Air Resources Board, said that studies commissioned by the board show that the economic impact of cap-and-trade evens out in the long-term.

"I don’t know that [it would prevent energy costs from going up], but what I do know is that our studies show that the economic impact of our program will be flat," said Cleghorn.

Over time, the program would generate a mass of funds the state could then use to fund other measures to preserve the environment. AB 32 -- the legislation that authorized cap-and-trade -- requires the money raised from the auction to further the goals of AB 32.

"We’re estimating that through 2013, there will be about a billion dollars raised," said Cleghorn. He said the combination of AB 32 programs "should open up a much wider sort of choices for fuels, and draw investment that will generate new jobs."

Detractors of cap-and-trade had painted a much bleaker picture for the economy. In March 2010, a study commissioned by AB 32 Implementation Group argued that a statewide cap-and-trade program would lead to an $818 increase in annual expenses for a family of four in 2012. This estimate was based on an assumption that permits would be sold at 60 dollars apiece.

A day before the auction, the California Chamber of Commerce filed a lawsuit seeking to invalidate the program on the basis that it violated AB 32.

“What was not authorized by AB 32 is the Board’s decision to withhold for itself a percentage of the annual statewide greenhouse gas (GHG) emissions allowances and to auction them off to the highest bidders, thus raising from taxpayers up to $70 billion or more of revenue for the state to use,” said the complaint.

Despite the lawsuit, the board went ahead with the auction the next day. 

"The only thing we'll say about the lawsuit is that we're looking through it and we're confident cap-and-trade will survive any legal battle," said Cleghorn.

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