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

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:Seems like it would've worked

[Cyberdyne]

I can see it now--we'll have trans-Pacific transmission lines from India and China!

No, just more imported products of energy-intensive industrial processes, like steel and aluminum. It's already happening to an alarming extent in Europe for exactly that reason, with large metal-working plants (which can consume hundreds of megawatts each) getting moved overseas. Just because you can't import the electricity itself doesn't mean the resulting products have to be made in the US!