Sketchy First Look at California Cap & Trade

On Tuesday the California Air Resources Board put out a sneak preview of the carbon cap & trade system mandated by the Global Warming Solutions Act of 2006 (AB 32). Couched as a “preliminary draft,” the 132-page plan is intended as a broad outline for a final Cap-and-Trade regulation scheduled to go before the board late next year.

As such, the draft lacks a few key components, such as how many allowances the state plans to auction off to industry, versus give away. Air Board chief Mary Nichols says her agency is still waiting on recommendations from an expert committee on how to best handle allowances.

Environmentalists have been pushing for polluters to pay for allowances up front. In an email to me on Tuesday, in anticipation of the draft, Bernadette del Chiaro of Environment California wrote that her group is “slightly disappointed that ARB staff are punting on the issue of auctions. ARB in the scoping plan said they are committed to getting to 100% auctions. I hope the draft rules at least repeat this commitment.”

The draft appears to stop short of an outright commitment, reiterating that “transition to a 100 percent auction was a worthwhile goal.” In a conference call with reporters, Nichols said she anticipates at least a partial auction. Also undetermined is how to deploy the funds that emitters may pay for allowances. Nichols said a $10 per ton price for carbon could produce a two-to-four-billion-dollar pool of money, which could be used for such things as “buying down” utility costs for low-income families or creating incentives for development of renewable energy technology. Nichols declined to project what a cap & trade system would end up costing households in California.

You can download a PDF file of the complete report at the CARB website (under “What’s New). A public meeting is scheduled for December 14 in Sacramento, to get feedback on the Preliminary Draft Regulation released this week.

Also on Tuesday, the Governor’s Office announced that Quebec, one of California’s partners in the Western Climate Initiative for regional carbon trading, has set a target “to reduce its greenhouse gas emissions 20 percent below 1990 levels by 2020 and the introduction of a clean-car emissions standard equivalent to California’s Vehicle Tailpipe Emissions Standards.”

The WCI includes seven western states and four Canadian provinces. Any progress from the state’s WCI partners is welcome at this point, as most have been reluctant to set their intentions into law.

Check out our interactive map of California’s largest industrial emitters of greenhouse gases.