carbon trading


Emissions Trading May Not Worsen Local Pollution

Study could weaken underpinnings of suit holding up AB 32

Trees killed by acid rain. (Photo: bdk)

In response to a court order, California regulators say they are working up a “very robust analysis” of alternatives to cap & trade, a critical part of the state’s AB 32 climate law.

Right now, the entire implementation plan is on hold, after environmental justice groups sued the Air Resources Board.

A lower court ruling has forced state officials to reexamine the carbon trading program, on the grounds that alternative ways of controlling emissions were not adequately considered.

The activists’ concern is that a market-based system of emission reductions will create “hot spots” in low-income communities of color as industrial polluters buy the rights (called allowances, or carbon credits) to emit more greenhouse gases, and potentially bring other more toxic forms of pollution into nearby communities.

But will that happen? Since carbon trading won’t start until at least next year, the argument is hypothetical. But another example of emissions trading has been well tested.
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EU Lesson for CA: Don’t Give Away the Store

Advice from Europe for California’s cap-and-trade captains

As California lurches toward what would be the nation’s most comprehensive carbon trading program, I got an interesting perspective from the world’s largest, the European Union. “California is one of the states that is actually moving forward in the US,” EU Commissioner Connie Hedegaard told me in a one-on-one interview this week. “And we know in Europe that sometimes when California starts to do something, that it’s the start of something that will end up being the American way of doing things.”

Connie Hedegaard directs climate action for the EU. (Photo: European Union)

Hedegaard, who is the EU’s Commissioner for Climate Action, cited California’s leadership in regulating tailpipe emissions, among others, though when it comes to cap-and-trade for carbon, it’s unclear who will be following. Certainly Congress is in no mood, and the regional trading scheme known as the Western Climate Initiative has been severely stunted.

Citing recent estimates that five years of carbon trading in Europe has lowered total greenhouse gas emissions by less than one percent, I asked her if she considers that a success. “Yes, I do,” replied Hedegaard. She countered with her own figures that while US emissions had continued to rise between 1990 and 2009, those in Europe had fallen 16%. “So we’re doing something right,” she said (again, EU carbon trading only began in 2005). “Of course when you’re building a complex system like that, those who do it first, in the first couple of years, have a lot of lessons learned.” Continue reading

Rallying Against Carbon Trading

Rachel Cohen

Protesters at a carbon conference in San Francisco. Photo: Rachel Cohen

Businesses wary of a cap-and-trade system for carbon regulation are finding some unlikely allies these days. Outside a carbon policy conference in San Francisco today, the concept was assailed by members of the “environmental justice” movement.

About sixty protesters  targeted an event called Navigating the American Carbon World, an event that brought together representatives from government and  industry, including firms interested in facilitating emerging carbon markets.

“Inside there are thousands of people trying to make big money off-carbon trading,” said rally organizer Brianna Morgan of Rising Tide North America, as demonstrators outside sang songs, led chants, and performed political street theater. “We believe that carbon trading and carbon offsets let corporations off the hook from making real changes to the way they do business,” said Morgan.

Morgan and her fellow protesters were part of Mobilization for Climate Justice West, a network of 15 to 20 community-based groups.

Meanwhile conference attendees inside the Marriott hotel discussed climate change policy topics including carbon trading, a major component of the California climate law passed in 2006, known as AB 32.

The European Community is already using a carbon trading system, in which industrial emitters are allocated “carbon credits” corresponding to a specific quantity of global warming pollution. If facilities emit more CO2 than they have credits, they can buy additional credits in a regulated carbon market. But carbon markets have been slow to get off the ground elsewhere, including the US. California’s cap-and-trade system, scheduled to take effect in 2012, has encountered resistance from business groups and conservative candidates for Governor.

The San Francisco protesters said they object, in part, to carbon offsets, which allow emitters to meet regulatory requirements by funding activities elsewhere in the world, such as re-forestation, the exact impact of which on net carbon emissions may be elusive. Meanwhile, local emissions are allowed to continue.

“We believe that this is rewarding people for doing exactly what they always do,” Morgan said.

She added that carbon emissions coincide with other types of pollution that have public health consequences at home, such as increased rates of asthma near oil refineries and major ports.

California’s Climate Partners Get Cold Feet

On Wednesday’s edition of The California Report, correspondent Tom Banse takes the pulse of a vital organ in California’s climate strategy; the regional carbon trading market. The upshot: Reports of its well-being may be greatly exaggerated.

Are they with us?  It’s hard to tell looking at some of California’s supposed partners in the Western Climate Initiative.

WCI includes six states besides California and four Canadian provinces.  Last year the group agreed on a regional “cap-and-trade” plan to reduce greenhouse gas emissions (and not coincidentally to show the federal government how it’s done).  Governors and environmental agencies in the participating states continue to voice support for moving ahead with a regional initiative.  The rub is that the executive branch cannot just snap its fingers and will the plan into being.  A major policy change like this requires state legislatures to adopt the cap-and-trade rules.  And some of those lawmakers definitely have other ideas.

Utah offers the most dramatic example.  Before adjourning for the year, the state House of Representatives voted 52-19 in favor of a non-binding resolution directed at Utah Governor Jon Huntsman:

    “…WHEREAS, experts, including the Congressional Budget Office, warn against cap and trade policies, especially regional programs like the seven-member WCI;WHEREAS, experts also point out that the costs of such programming will be borne by consumers, placing a disproportionately high burden on poorer households; andWHEREAS, no state or nation has enhanced economic opportunities for its citizens or increased real GDP through cap and trade or other carbon reduction policies:NOW, THEREFORE, BE IT RESOLVED that the House of Representatives urges the Governor to withdraw Utah from the Western Climate Initiative.”

Huntsman, a Republican, is apparently ignoring the legislative shot across his bow.

Skepticism is also alive and well in the Arizona Legislature, where this preemptive strike skips the whereases and gets right to the job of handcuffing the executive branch.

    “The [Arizona Department of Environmental Quality] shall not participate in the Western climate initiative that is organized and operated by an affiliation of state governors and one or more provinces of Canada.”

The succinct bill has passed out of state House committee and awaits a floor vote.

Meanwhile in New Mexico, the legislature is done for the year.  Legislation to authorize a greenhouse gas emissions cap was not even broached.  Montana’s legislature is still in session, but all lawmakers in Helena have the stomach to tackle is preparatory measures.  They would set up the regulatory framework for underground carbon storage (aka, sequestration) and require large companies to track and report their carbon emissions.

At his glassmaking plant in southwestern Washington, Steve Smith worries that a regional cap on carbon emissions will render his business unable to compete with suppliers outside the region. Photo by Tom Banse.

At his glass making plant in southwestern Washington, Steve Smith worries that a regional cap on carbon emissions will render his business unable to compete with suppliers outside the region. Photo by Tom Banse.

The governors of Oregon and Washington State served up the full climate enchilada to their legislatures this January only to see it picked apart.

That leaves California as the sole state in the Western Climate Initiative that has so far adopted cap-and-trade as the law of the land.  California’s partners have consistently told us that a national program is the preferable way to regulate greenhouse gases.  Now the “preferable” way is starting to look like the only way.

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.