National Cap-and-Trade Program Unveiled

California’s largest electric utility joined with a coalition of about 30 other companies and environmental groups today, in taking the wraps off a proposed national climate strategy. After two years of talks, the U.S. Climate Action Partnership, which includes PG&E, is ready to put its muscle behind it’s Blueprint for Legislative Action, just in time for Inauguration Day.

The program uses a trading program for carbon credits, much like the Western Climate Initiative, a collaboration of several western states and Canadian provinces. The goal is to roll back greenhouse gas emissions to:

> 97%‐102% of 2005 levels by 2012
> 80%‐86% of 2005 levels by 2020
> 58% of 2005 levels by 2030
> 20% of 2005 levels by 2050

While stated a little differently here, the targets reflect what has become the broadly accepted goal of cutting GHGs 80% by 2050.

A thorny question surrounding carbon trading programs is always whether pollution credits will be auctioned off or given away free to major emitters. According to the group’s “blueprint:”

“USCAP recommends that a significant portion of allowances should be initially distributed free to
capped entities and economic sectors particularly disadvantaged by the secondary price effects of a
cap and that free distribution of allowances be phased out over time.”

This would appear to conflict with the stated goals of the Western Climate Initiative, whose representatives have committed (at least verbally) to making companies pay for most credits up front. And yet the USCAP plan carries the endorsement of major environmental organizations, such as The Nature Conservancy and the NRDC, both of which are members.

As one corporate executive put it at the plan’s unveiling, “We simply think you have to give away a significant portion…and then phase them out over time.”

The USCAP plan also offers emitters the chance to buy approved carbon offsets and gives special allowances to companies that have already achieved verifiable reductions in GHG emissions–or plan to do so.

  • Steve Bloom

    Er, wasn’t that 80% supposed to be relative to a 1990 baseline? How much more CO2 does a 2005 baseline get us?

    Regardless, even if implemented globally, I’m afraid this will have us looking at 450 ppm in the rear-view mirror.

  • Craig Miller

    Sorry I just caught up with this comment. Thanks for raising this point. It’s an important but confusing one, so I may do a separate post on it.
    The USCAP plan announced last month aims for an 80% reduction in GHGs from 2005 levels, by 2050. But yes, most of California’s targets are based on 1990 levels (also 80% by 2050). That 15 years in the middle is hardly trivial, as much of the explosive development in China and India occurred during this time, as US emissions were also rising. The number that will really matter is the one that comes out in the federal legislation, which is still being drafted. We’re hearing more voices saying that California’s 2020 target (about 15% from today’s level) is unobtainable, Stanford’s Steve Schneider and former EPA Administrator Christine Todd Whitman being two recent examples. See Gretchen’s post from 1/30.