California, a leader in efficiency and clean energy policies for decades, is about to embark on another pioneering climate change program.
November 14 marks the first auction in its cap-and-trade system, which uses a market-based mechanism to reduce the greenhouse gas emissions that are warming the planet.
On its own, California’s program will drive down harmful emissions in the ninth largest economy in the world. But perhaps more importantly, California’s example could guide and prod us toward national action against climate change.
California’s cap-and-trade program is not the first in the U.S. Nine Northeast states launched the Regional Greenhouse Gas Initiative (RGGI) in 2008 with the goal of reducing carbon dioxide emissions from the power sector 10 percent by 2018.
However, California’s program is more ambitious in both breadth and depth. California’s program will cover both the power and industrial sectors in 2013, and will add transportation and heating fuels in 2015. Due to this broad scope and California’s large economy, the state’s program will encompass over twice as much greenhouse gas emissions as RGGI.
California’s program also differs from RGGI in that it covers more types of greenhouse gases, covers electricity imports, has a significantly higher floor price for greenhouse gas allowances at auction, and will allocate many of these allowances freely to regulated entities. Cap-and-trade is just one part of California’s overarching climate change program, authorized by the Global Warming Solutions Act of 2006 (AB 32), to bring greenhouse gas emissions down to 1990 levels by 2020.
California’s new program would need to be followed by other jurisdictions and ultimately emulated by the federal government to have a meaningful impact on climate change. Fortunately, we’ve often seen national environmental policies bubble up from the states.
Energy efficiency standards for home appliances like dishwashers and refrigerators are an excellent example. In a pattern that has been repeated numerous times, the federal government will adopt a nationwide standard for certain appliances after several states have done so. Industry then benefits from having one regulation to comply with, instead of a patchwork of state standards. Federal lawmakers benefit from having state examples to follow.
Despite growing public concern about climate change, Congress has generally avoided the topic since a cap-and-trade bill stalled in the Senate in 2009. With California and the Northeast now regulating carbon emissions, we may be witnessing a critical step toward a comprehensive climate policy. If California’s cap-and-trade program is successful, and if RGGI continues to succeed, we may see other states follow suit – perhaps starting with former Western Climate Initiative members. In the meantime, California’s program is poised to make real emission cuts while supporting its clean energy economy.
Visit our new California Cap-and-Trade Page to learn more.