Skip to comments.CA: Governor's panel suggests market to achieve climate change goals (107-page report released)
Posted on 07/27/2007 6:26:37 PM PDT by NormsRevenge
As California begins mapping out its strategy to cut greenhouse gas emissions, how industries will be forced to comply is emerging as one of the most complex aspects of the debate.
A key component of the state's plan to implement last year's far-reaching global warming law was submitted Friday to California air regulators. The state Air Resources Board received a 107-page report commissioned last year by Gov. Arnold Schwarzenegger that endorses a market-trading program.
Under such a program, power plants, refineries, cement plants and other industries that produce greenhouse gases can buy and sell credits for their emissions. That allows businesses that cannot cut their greenhouse gas releases because of cost or technological hurdles to essentially buy the right to pollute from other, cleaner companies.
The idea is that a so-called carbon market will lead to a reduction in overall emissions because it provides a financial incentive for the cleaner companies to get even cleaner. Yet the issue has proved contentious.
The report submitted Friday to state air regulators concluded that a carbon market will allow California to achieve the goals of its global warming law without irreparably harming its major industries.
"We can get to our goals at a much lower cost if we include, alongside regulation, a cap-and-trade program," said Lawrence Goulder, a professor of environmental economics at Stanford University who was vice chairman of the committee that produced the report.
The report also offered a blueprint about how such a system might be designed in California. It calls for incorporating pieces of similar systems created in Europe and the Northeast.
"Everybody is trying to focus now on how do we take the abstract idea of a market and convert it into something that works for California," said Air Resources Board Chairwoman Mary Nichols, who supports a market for trading carbon credits.
The Air Resource Board will decide what kind of market if at all will be among California's strategies to meet the law, the Global Warming Solutions Act. It requires the state to reduce greenhouse gases by an estimated 25 percent by the year 2020.
First, however, Democrats who wrote the global warming law want the air board to begin writing regulations to reduce greenhouse gas emissions.
They say the state must focus on rules and technologies to start cutting emissions significantly before it begins considering a carbon market. Democrats and environmentalists fear such a market will be difficult to enforce and may not lead to great reductions.
The air board was given the carbon market report after Schwarzenegger created a committee to study the issue. He did so under a provision of the law that allows for a market. The provision was added to the law as part of a compromise between Democrats who are skeptical of such a program and the governor, who has spent the last year promoting it.
Friday's report said a market-based program for trading emission credits would complement future regulations designed to force industries to reduce their pollutants.
The air board is taking parallel steps to enact those regulations at the same time it is considering the carbon-trading market. Last month, for example, it approved a set of rules that included initiatives to promote low-carbon fuels and ban the sale of do-it-yourself automotive refrigerants.
The Schwarzenegger committee that produced the latest report envisions a California market that includes as many industrial sectors as possible. That would make it easier for businesses to collectively reduce their output of the heat-trapping gases blamed for warming the Earth.
If the board eventually adopts the market approach, several issues will need to be resolved.
Among them: Who would be covered? Should companies be given or must they buy allowances that give them a set amount of annual emissions? How would utilities and power generators be regulated?
Of concern to environmental groups is whether companies may be allowed too many ways to get out of reducing their emissions.
Under one scenario, for example, companies could continue polluting, but for a price. Instead of reducing their emissions, they would be allowed to contribute money for tree-planting or energy-efficiency programs, either within California or in other states.
"Can California really claim to be a leader of global warming if we outsource the effort?" said Chris Busch, an economist with the Union of Concerned Scientists.
Read the Market Advisory Committee report at http://www.arb.ca.gov
Report recommends emissions trading market for California
The Associated Press
Under California’s 2006 global warming law, the state Air Resources Board will consider creating an emissions-trading market as a way for industries to reduce their output of greenhouse gases. Here are some proposals for how such a market would work, as outlined by a committee appointed by Gov. Arnold Schwarzenegger:
Recommendations presented in a report to the Air Resources Board:
_ Set a stringent cap on greenhouse gases requiring emission reductions to come from both mandatory regulations and a trading program. Gradually lower the cap over time.
_ Create a trading market that encompasses as many sectors of the economy as possible. The more industries that are included, the less expensive it will be for companies to comply with a state cap. Start with a small program and expand it over time.
_ Regulate carbon dioxide and, in certain cases, the industrial gases hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.
_ In establishing the market, sell and give away allowances to companies that will participate in the program. But sell the majority. Other trading programs that have given too many allowances away have led to windfall profits by companies that later charge customers for what would have been their compliance costs.
_ Companies should get credit for so-called “offsets” that meet stringent standards. Such projects would allow companies to pay for tree-planting or energy-efficiency programs in California or elsewhere as a way to make up for their inability to meet their emission goals.
_ Companies should submit quarterly electronic reports that detail emission output to the Air Resources Board. The data would be posted on board’s Web site.
_ Penalize companies that fail to meet their designated greenhouse gas emission target. Establish both criminal and civil penalties for intentional violations.
_ Eventually link California’s cap-and-trade program with other trading systems as a way to lower costs and achieve greater emission reductions over time.
Source: Market Advisory Committee report “Recommendations for Designing a Greenhouse Gas Cap-and-Trade System for California.”
Penalize companies that fail to meet their designated greenhouse gas emission target. Establish both criminal and civil penalties for intentional violations.
Oh, that should be really good for the old business atmosphere in California.
Coastal enclaves (think San Francisco Bay area), upwind from closed, structural air basin (think San Joaquin Valley) should have zero emissions - no trading permitted. Those along California's eastern border can pollute to their hearts content. Move the dairies, cement plants, gas fired power plants and all public school buses to Blythe.
Carbon Credit scam coming to California!
New Bubble, huge bureaucracies, politicians on auction to apportion credits and ceilings.
It’s so blatant.
Liberals deserve to live in the world they are creating. I deserve better.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
But it's "market-based" so it's a good thing and you should support it. ;-)