If California were a nation, its economy would be the twelfth largest in the world. Not only does the Golden State have the largest and one of the most diverse economies in the U.S., it has been at the leading, even cutting, edge of efforts aimed at forging a leaner, cleaner, low-carbon society for the 21st century.
When it comes to government-led efforts to reduce carbon emissions and mitigate and adapt to the potentially devastating effects of rapid climate change, 2013 marked another path-setting year for California. In 2013, its first full year of operation, the value of carbon allowances traded under the state's pioneering carbon emissions Cap-and-Trade Program totaled $1.1 billion and brought nearly $500 million in much needed revenue to a fiscally challenged state government.
Setting a price on carbon pollution
As News10 ABC reported, California's climate change law sets annual caps on greenhouse gas emissions for heavy polluters, such as coal-fired power plants, oil refineries, and industrial companies. The carbon/greenhouse gas (GHG) emissions pollution cap will slide lower 3 percent each year beginning in 2013.
Those that cannot reduce their GHG emissions to the cap level or below are required to offset their emissions by investing in cleaner, less polluting operations, such as reforestation projects, or purchase carbon emission offset allowances on the cap-and-trade market. These are offered by companies whose emissions fall below the cap or issuers that have developed projects that effectively offset quantifiable amounts of carbon and GHG emissions.
Auctions of carbon cap-and-trade allowances brought in nearly $477 million for the California treasury in 2013, News10 ABC reported. “Those pollution allowances are selling like hotcakes,” commented political editor John Myers.
California's carbon cap-and-trade program “brings together the best aspects of regulation and using the market to drive flexible mechanisms,” added Stanley Young of the California Environmental Protection Agency's Air Resources Board (CARB).
Making polluters pay for pollution
As CARB explains on its website,
“Market forces spur technological innovation and investments in clean energy. Cap-and-trade is an environmentally effective and economically efficient response to climate change.”
As originally enacted, California's cap-and-trade auction revenues were earmarked to be invested in efforts to combat climate change. Struggling to balance the state's budget, the governor and state congress suspended that aspect of the legislation and used them to help balance the state's budget, however.
With huge budget surpluses projected in coming years, proponents and supporters of the cap-and-trade bill are now urging Governor Jerry Brown and state legislators to repay that money and invest it in the type of projects for which it was originally intended.
“Let's spend the climate change revenues to reduce the pollution that causes climate change,” Bill Magavern of the Coalition for Clean Air stated in an News10 interview, such as home weatherization or subsidizing solar panel installations for low-income households.
Moreover, even more in the way of cap-and-trade revenue would have come the state's way had oil companies and other big polluters not been given carbon emissions allowances for free, Magavern noted.
“The oil companies are essentially getting off the hook...I think politics has everything to do with it,” he commented.
Other governments are now looking to emulate and/or link to California's carbon cap-and-trade market. Quebec looks like it will be the first. An announcement was made back in October that representatives from the respective U.S. state and Canadian provincial governments had signed “an agreement outlining steps and procedures to fully harmonize and integrate the two programs.”
With some luck, opposition legislators in Washington D.C. may finally see the light and hold polluters responsible for the pollution they create and the health and environmental damage that results. Enacting a national carbon emissions cap-and-trade program, or perhaps even a national carbon emissions tax, would be a historic step in that direction.