The approach forces bidders to guess what the clearing price will be. This rewards bidders that are best able to guess the clearing price, which are generally the largest bidders that can spend the most on market analysis. This type of auction discourages participation by smaller bidders. A further disadvantage of this auction form is that it results in some bidders being paid more and others being paid less for each ton of reduction. How much more than cost it bids will depend on its assessment of how likely it is to win, i.e. of other bidders' likely bidding strategies.
Large firms can better absorb the fixed cost of making an accurate assessment.
Hence this type of auction discourages participation by smaller bidders. Each bidder is paid the opportunity cost of its winnings. It is a dominant strategy to truthfully report your true cost of abatement, even if you are a big bidder. This is similar to the uniform-price auction when there are many bidders and no bidder is large. The outcome is fully efficient when the costs of abatement are privately known and do not depend on information held by other bidders.