Carbon Trade Seen as Essential For California
Date: 19-Jan-00
Country: US
Author: Timothy Gardner
California passed legislation supported by Republican Gov. Arnold Schwarzenegger two weeks ago that requires the state to reduce economy-wide emissions of greenhouse gases by 25 percent by 2020.
"Trading is the only way efficiency will be gained to meet these caps," Jason Patrick, a greenhouse gas broker with New York-based Evolution Markets, said at an emissions conference about California's targets.
The legislation largely leaves the details of how to cut emissions up to the California Air Resources Board. The rules suggest that trading of emissions credits -- in which companies that have cut emissions under set limits can sell credits to those that haven't -- is one way to cut emissions, but do not specifically require it.
"The air board doesn't know how to do this," Terry Tamminen, Schwarzenegger's environmental adviser, said in Washington on Tuesday, adding that the board will add 100 workers to figure out how to use markets to reduce emissions.
Greenhouse gas market players are eager to start trade in the United States, the world's largest polluter. In the European Union's greenhouse gas market set up to meet its members' obligations under the Kyoto Protocol, US$8.2 billion worth of emissions credits changed hands in 2005, its first year of trade.
California's legislate-first-plan-later move stands in contrast to the other major effort in the United States to cap emissions linked to global warming, the Regional Greenhouse Gas Initiative.
The RGGI, a group of seven states in the Northeast, is attempting to regulate the main greenhouse gas, carbon dioxide, at power plants. The states held meetings for years to plan how to implement the cuts before agreeing to a model rule this summer. The states' governments are now working to pass the rules before the program starts in 2009.
Schwarzenegger's move to cut emissions was as much a political move as it was an environmental action, some sources at the 2006 Global Cap and Trade Forum in Washington said. Schwarzenegger runs for re-election in November.
As a result, implementing the plan could have its ups and downs, the sources said. One challenge could be regulating emissions from cars in California, which has a higher percentage of vehicles than the RGGI states do, and which are harder to regulate than stationary sources of greenhouse gases.
California has issued rules that would force manufacturers to cut carbon dioxide emissions from cars. But the rules have been held up by litigation from automakers.
California, which has long led the nation in environmental initiatives, has occasionally used "command and control" and other creative methods to combat pollution. The state passed a law restricting the imports of electricity on long-term contracts from dirty sources of electricity such as coal plants from neighboring states.
Schwarzenegger is expected to sign the emissions legislation later this month.