California full-steam-ahead on cap and trade

Whether or not Californians focused on climate change in voting on Proposition 23 (as Ann and Sean discuss), their rejection of 23 means full steam ahead on climate change regulation.  Notably, while the rest of the country leaps back from cap and trade (here’s Obama throwing it under the bus in his post-election comments), California is moving ahead with cap and trade policy.  Under the state’s overall plan for reducing greenhouse gases back to 1990 levels by 2020, the proposed cap-and-trade program is the means by which the state plans to achieve just under 20% of those reductions.  And we have a pretty good sense now of what the program will look like. 

In the days before the election, the Air Resources Board released what will likely be the final draft of its cap and trade regulations, up for approval by the Board in December.  Michael Wara of Stanford has a good first-blush take on the contours of the program here.   Basically, ARB is proposing lots of free allowances to start (following the urging of Gov. Schwarzenegger — see this letter — and in contrast to the advice of its own Economic and Allocation Advisory Committee); a fairly stringent limit on the use of offsets; and a cap set with the aim of avoiding overallocation problems that have plagued other cap-and-trade programs.

Assuming that the program isn’t tripped up by Proposition 26 constraints (see Jonathan’s view here, with which I basically agree), we will soon see the closest thing yet to an economy-wide GHG cap in the US.  Even if you hate cap and trade (I’m talking to you, Ethan), don’t you get a little excited about our laboratories of democracy?

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Reader Comments

3 Replies to “California full-steam-ahead on cap and trade”

  1. Given the global nature of climate, it seems reasonable that carbon allowances and offsets from California should be marketable in the European Union and other places where carbon is traded. Any carbon offset anywhere in the world benefits the whole world. California has the unique opportunity to become the world’s leading carbon market and grand champion planet saver.

    There may be a problem with carbon dioxide from other states drifting into California and disrupting the delicate balance between allowances and offsets. Despite this, the carbon market in California appears to be a lucrative opportunity for smart business people who know how to make money by saving the planet.

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About Cara

Cara Horowitz

Cara Horowitz is the co-executive director of the Emmett Institute on Climate Change and the Environment at UCLA School of Law. The Emmett Institute was founded as the f…

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