California to Hold Auction of Greenhouse Gas Emissions SAN FRANCISCO - California's fledging market-based system for reducing greenhouse gas emissions makes its formal debut on Wednesday with its auction of state-issued pollution allowances. More than six years in the making, the state's so-called cap-and-trade program sets limits on carbon dioxide emissions for virtually all sectors of California's economy, the ninth-largest in the world. Emissions allowances are allotted to polluters, and companies whose emissions exceed their allocations must either obtain extra allowances or buy credits from projects that cut greenhouse gas emissions. Almost all of the 23.1 million allowances that California has given out to utilities and industry for complying with the program in 2013 have been free; the auction will measure how they are actually valued by the market. Some 39.5 million allowances covering emissions in 2015 will also be on sale Wednesday. Sealed bids can be submitted over the Internet in the three-hour auction, with the results to be announced on Monday. Depending on who is talking, the auction is a historic threshold in slowing climate change, or economic self-immolation that will cause refiners, cement makers or other companies to flee. At one time, California's cap-and-trade system, mandated by a 2006 state law, seemed a likely blueprint for a national system. That possibility receded when federal cap-and-trade legislation died in Congress in 2010. Still, Northeastern and mid-Atlantic states are experimenting with a far more modest system that they cast as a success, even though its allowances are trading at or below minimum price. The world's biggest cap-and-trade program for greenhouse gases, pioneered by the European Union, has struggled with a chronic oversupply of carbon allowances and sagging prices. Backers of California's experiment - like Gary Gero, the president of the state's Climate Action Reserve, a nonprofit group that tracks greenhouse gas emissions - express optimism about its prospects. "We're not creating a market for a market's sake," he said. We're creating a market for addressing the serious threat of global climate change. The total carbon allowances distributed in California will gradually decline over the years, forcing more emissions cuts. As California's market gears up, each business must decide whether it is more cost-efficient to reduce its emissions or buy excess allowances from other companies that do not need them. Gino DiCaro, a spokesman for the AB32 Implementation Group, an industry alliance whose name refers to the climate change law, warned that the auction would "extract billions of dollars from the industrial sector and our high-wage employers." Also, the California Chamber of Commerce filed an 11th-hour suit Tuesday to stop the auction.