Yesterday, California’s Air Resources Board unanimously adopted its cap-and-trade regulation, the final and most critical piece of its landmark climate policy, the Global Warming Solutions Act of 2006 (AB 32), which Environmental Defense Fund (EDF) co-sponsored.
We now have the beginning of the most comprehensive carbon market in North America and underscores the fact that sensible climate policy is still within reach in the United States.
California’s efforts come at a crucial time when other countries are leapfrogging the U.S. in the race to put policies into action that will give them an edge in the global, multi-trillion dollar energy market:
- Last week, Australia moved closer to passing a carbon tax that will swiftly transition to a national cap-and-trade system;
- China has planted the seeds for a domestic carbon market in its current five-year plan; and
- Europe’s advocate general just issued a preliminary opinion saying the European Union’s cap-and-trade plan can cover aviation emissions, a major piece of the transportation puzzle.
California has the world’s eighth largest economy and its carbon market will be the second largest in the world next to Europe’s. It creates an economic incentive for polluters, innovators and emissions reduction project developers to find low-cost opportunities to cut pollution across California. The program also gives the state the opportunity to link to other sub-national, national and regional markets across the globe, including the Western Climate Initiative.
EDF champions the cap-and-trade approach because it is a proven method to reduce emissions and at low cost. This was documented most clearly when we worked with President George H. W. Bush to get this country’s first cap-and-trade program in place to reduce acid rain.
In addition to reducing climate change pollution and cleaning up our air, a cap-and-trade program improves our ability to compete and dominate the global clean energy market. Since California passed AB 32, the state has received more than $9 billion in venture capital investments that have grown the state’s clean energy economy. Between 2008 and 2009, its green sector grew three times as fast as other industry sectors and it has the largest domestic clean energy economy in the country.
There are no two ways about it: we have an economic powerhouse showing environmental leadership and political will by putting a price on carbon. California joins other forward-thinking countries that are adopting similar policies to secure their economic and energy futures.
Over the coming weeks, we will be blogging about how the program works, the economic and ecosystem benefits of using offsets, and the market trading activity that has already started.