How California's Carbon Market Actually Works

Lasrick writes: Almost 10 years ago, California's legislature passed Assembly Bill 32, the Global Warming Solutions Act of 2006. AB 32 set the most ambitious legally binding climate policy in the United States, requiring that California's greenhouse gas emissions return to 1990 levels by the year 2020. The centerpiece of the state's efforts — in rhetorical terms, if not practical ones — is a comprehensive carbon market, which California's leaders promote as a model policy for controlling carbon pollution. Over the course of the past 18 months, however, California quietly changed its approach to a critical rule affecting the carbon market's integrity. Under the new rule, utilities are rewarded for swapping contracts on the Western electricity grid, without actually reducing greenhouse gas emissions to the atmosphere. Now that the Environmental Protection Agency is preparing to regulate greenhouse gases from power plants, many are looking to the Golden State for best climate policy practices. On that score, California's experience offers cautionary insights into the challenges of using carbon markets to reduce greenhouse gas emissions.

Comments

Seems like it would've worked

[timrod]

The thing is, it seems from the paper like the cap-and-trade system California has works - it's just that other states don't have the same system and thus there isn't much of an impact. It would be interesting to see a group of neighboring states (perhaps New England) try this method and see how it works when they can't meet their emissions goals by offloading their emissions to states that don't have a cap-and-trade policy in place.

Re:Seems like it would've worked

[MightyYar]

Well, here you go!

On the surface, it has been quite successful. But you have to remember that most of the reduction has come from natural gas displacing coal - which thanks to fracking would have happened even without the carbon trading.

Is it really a problem?

[Ichijo]

For years, Southern California Edison imported electricity from the Four Corners Power Plant, a coal-fired facility in northwestern New Mexico... [a few months after the carbon market took effect in 2013] the company sold its interest in the coal plant to an Arizona utility (APS, 2013)... this transaction will not reduce net greenhouse gas emissions to the atmosphere. The coal plant will keep emitting pollution just as before--only now it serves customers in Arizona, not California.

As other states follow California's lead, it will become more and more difficult for coal plants to stay in operation.

Re:Is it really a problem?

[TubeSteak]

As other states follow California's lead, it will become more and more difficult for coal plants to stay in operation.

The Clean Air Act was passed in 1970.
Existing coal plants were grandfathered in, with the assumption that they'd eventually be upgraded or replaced.
Instead, the coal industry has been operating the same dirty plants for >40 years.

The only reason "it will become more and more difficult for coal plants to stay in operation" is because the EPA has set a date for the closure of this loophole.

Related reading: The Coal Industry Has Been Fear-Mongering for 40 Years Now

Re:Is it really a problem?

[tsqr]

In Florida, the utilities have successfully sued people over installing solar power, but that is beginning to change as the laws were altered to stop them from doing this.

Citation on this?

Here you go.