Fresh off an election in which voters upheld the state’s global warming law, California regulators have approved cap-and-trade regulations that will carry the bulk of the workload as the state pushes to reduce emissions by 15 percent to 1990 levels by 2020. The California Air Resources Board approved the plan by a vote of 9-1.
Details are still being worked out, but the system will commence operation in 2012, initially covering electric utilities and heavy industry. A second phase will wrap transportation fuels into the mix in 2015. In all, the plan covers 360 businesses and 600 facilities, which together represent 80 percent of the state’s emissions.
California’s cap-and-trade regime won’t be the first in the United States (credit there goes to a collection of northeastern states), but it will be the biggest, most comprehensive and most ambitious. The state not only leads the United States in economic production but independently ranks among the largest economies in the world. And now that Democrats have formally abandoned efforts to institute a comprehensive climate program at the federal level, many are looking to the states. We here at Nature recently opined on this particular issue.
But the implications of this week’s advance go well beyond the United States. Most of the carbon trading will remain in the system as companies that can more cheaply reduce their emissions do so and then sell credits to others that need them. But in designing the system, California regulators left the door open for offsets, which would allow companies to funnel some money outside the system in order to reduce emissions elsewhere. And as it happens, California signed an agreement to partner on forest protection with the states of Acre in Brazil and Chiapas in Mexico, which could provide a source of international forestry offsets. For those who have been working to incorporate forest carbon into the global climate regime, that is a huge advance that coincides nicely with a significant advance in the deforestation negotiations in Cancun earlier this month.
Numerous efforts to curb emissions from deforestation are already under way around the world, but all receive direct funding from governments or multilateral institutions such as the World Bank. The fear is that such programs will never produce the kind of money that is needed to really solve the problem with deforestation, which is why many (though certainly not all) want to see carbon markets play a role. Europe has an active trading system but (at least for now) operates under the Kyoto Protocol, which does not allow credit for emissions from “avoided deforestation.” And with Europe showing no signs of a shift, California will likely be the first government to enable this kind of transaction.