California Blazes a Trail With the First U.S. Carbon Trading Program

By Andrew Moseman | December 17, 2010 10:57 am

carbonemissionsCap-and-trade is coming to California. The market-based system intended to cut greenhouse gas emissions is the key part of the Golden State’s effort, set into law four years ago, to cut its emissions to 1990 levels by 2020. Yesterday the California Air Resources Board finally approved the complex set of rules, which will go into effect in 2012.

Power plants, refineries and other industrial facilities that emit carbon dioxide and can’t cut their emissions by the required amount will be able to obtain pollution allowances from the state or buy them from other emitters with excess allowances. [Wall Street Journal]

Cap-and-trade is widespread in Europe, but California‘s plan would be the first large-scale, legally mandated version of this idea to get going in the United States.

“We’re inventing this,” said Mary Nichols, chairwoman of the state’s air quality board. “There is still going to be quite a bit of action needed before it becomes operational.” She said California is trying to “fill the vacuum created by the failure of Congress to pass any kind of climate or energy legislation for many years now.” [USA Today]

Under the plan, about 600 large industrial plants would be subject to the rules and have to buy the pollution allowances. In 2015, the rules expand to include fuel distributors and refineries.

However, the rules do allow companies to reduce their emissions reduction burden by buying carbon offsets from projects elsewhere in the state. This particular provision rankled environmental groups like the Sierra Club, which worry that it will support the practice of clear-cutting forests and then replanting them with single species tree plantations. Those trees might look good on paper when companies do their carbon accounting, but a tree farm is a poor excuse for a forest.

Another point of controversy is when industry should start having to pay. As California rolls out the program, it will first give away permits to plants; then, in a few years, it will introduce a system of auctioning off the permits. The state says giving freebies at first will aid industry in adapting to life under the new system, but some, from a pure economics point of view, argue that the best way to cut emissions and have a fair system is to make everybody pay from the get-go.

Many speakers at the public hearing criticized the board’s decision to ignore its own economic advisory committee’s recommendation to auction those allowances from the start of the program, rather than give them to industry and phase in auctions. “Auctioning provides a sharper price signal,” said UC Berkeley economist Michael Hanneman, adding that giving away allowances for free “risks granting windfall profits” to industry. [Los Angeles Times]

Related Content:
DISCOVER: Carbon Trading: Environmental Godsend or Giant Shell Game?
80beats: The Cancun Climate Summit Is Over. Did They Agree on Anything?
80beats: Two New Global Warming Studies Spell Trouble for Lake Tahoe
80beats: California Pushes Ahead With Massive Solar Thermal Projects
80beats: California’s Fog Is Clearing, and That’s Bad News for Redwoods

Image: iStockphoto

CATEGORIZED UNDER: Environment
  • Matt B.

    Will there be a conflict if a national cap-and-trade program is ever insituted?

  • http://clubneko.net nick

    They should sell the carbon credits from the state parks and forests, city parks, etc so those parks can make money to stay in the business of preserving nature for us, and maybe get enough money to expand.

  • Wil

    So, if California severely damages its own economy by unilaterally enacting Cap and Trade, and nobody else in the world does the same, then what positive thing is gained by the self-induced economic destruction? Global Warming will continue unchecked, only now California will be a bankrupt, disfunctional backwater.

    The economic destruction of doing this will be immediate and certain. But any damage from Global Warming would be very slow and gradual, if it happens at all.

    Suicide is easy. Self destruction is easy. Rebuilding a foolishly and needlessly self-destructed society is expensive, slow, and difficult.

    Sometimes is seems that some Americans have utterly lost their minds.

NEW ON DISCOVER
OPEN
CITIZEN SCIENCE
ADVERTISEMENT

Discover's Newsletter

Sign up to get the latest science news delivered weekly right to your inbox!

80beats

80beats is DISCOVER's news aggregator, weaving together the choicest tidbits from the best articles covering the day's most compelling topics.
ADVERTISEMENT

See More

ADVERTISEMENT
Collapse bottom bar
+

Login to your Account

X
E-mail address:
Password:
Remember me
Forgot your password?
No problem. Click here to have it e-mailed to you.

Not Registered Yet?

Register now for FREE. Registration only takes a few minutes to complete. Register now »