EDF’s Innovators Series profiles companies and people across California with bold solutions to reduce carbon pollution and help the state meet the goals of AB 32. Each addition to the series will profile a different solution, focused on the development of new technologies and ideas.
Although the Yurok Tribe is the largest Native American tribe by membership in California, it has struggled for centuries to keep hold of its ancestral land – an integral part of the Tribe’s livelihood. As European settlers moved in, the Yurok culture of living in unison with nature was rapidly and repeatedly challenged, as their land was taken and the natural ecosystems on which they depend were disrupted. In the New World economy that emerged, a person could make money from this acquired land in one of only three ways. The first was by cutting down the trees to harvest timber. The second was by cutting down the trees to create farmland. The third was by selling the land, most likely to someone who was hoping to cut down the trees for one of the first two purposes.
This story has played out countless times across the world, but California’s cap-and-trade program is changing the existing paradigm by creating a fourth way to derive revenue from forestland through the creation of an active carbon offsets market. The California Air Resources Board (CARB) has approved five types of offset protocols for use in cap and trade, one of which is for U.S. forestry projects. This offset protocol gives forest landowners that meet stringent certification criteria a financial incentive to keep sustainable inventories of trees, and their carbon, on the land as opposed to cutting and hauling it all away. Companies regulated under the cap-and-trade program may purchase certified offset credits to account for a small percentage of the greenhouse gas pollution they produce. In this way, offsets can provide valuable opportunities to cut pollution while also creating valuable sources of revenue for landowners.
More Americans, these days, understand the threat climate change presents in the present and in the future, and support taking action. Over 64 percent of Americans and 67 percent of Californians support curbing carbon pollution from existing power plants which the Environmental Protection Agency (EPA) is proposing to do through the Clean Power Plan. The EPA's proposal would set specific reduction targets for each state. In California and other states that are already acting to reduce climate pollution, the early assessments seem to be an upbeat "yes, we can meet those targets and probably exceed them." You wouldn't know that after reading a recent white paper released by Latham Watkins recently on behalf of the Western States Petroleum Association (WSPA), though.
The white paper purports to identify "design flaws" in California's cap-and-trade program. Some of the technical adjustments to the cap-and-trade program suggested in this paper are worthy of careful consideration. In fact, some have been addressed in part or are being considered through the regulatory process at the Air Resources Board. So there doesn’t seem to be any real reason to sound the alarm bells on California’s program at this point in time. Read More
Just over two years ago, the California Manufacturers and Technology Association (CMTA) hired Andrew Chang and Company, LLC, a Sacramento-based economics consulting firm, to produce a report titled “The Fiscal and Economic Impact of the California Global Warming Solutions Act of 2006.” Though one might hope a report of this nature would deliver honest analytics and academic rigor, EDF economists found it to be an all-out attack on California’s AB32 law, thinly disguised as a credible analysis, and based on a fundamental misunderstanding of basic economic principles, misguided modeling assumptions, faulty calculations, and a willful disregard for the potential benefits of environmental regulation.
Fast forward to September 2014, and now the California Drivers Alliance, an organization organized and funded by a collection of oil producers known as the Western States Petroleum Association (WSPA), has taken a deceitful page out of CMTA’s playbook. This time though, the deceptive report comes from Andrew Chang’s former business partner, Justin L. Adams, now at Encina Advisors. The report – “Placing Fuels Under the Cap: The Economic Impact to California” – again concludes AB32 will be destructive to the economy, while ignoring the wage gains many Californians will receive from higher-paying jobs in California’s emerging clean energy economy.
While there are more holes in this latest report than in a block of Swiss cheese, here are three of the biggest ones: Read More
Bigger is not always better, but a recent cap-and-trade auction in Quebec gave us one example of why it may be the case for a combined California and Quebec carbon market.
The linkage of Quebec and California’s markets has been watched by many around the world, and the start of joint auctions in November 2014 is the final step in full linkage. Last month, however, both jurisdictions were busy conducting their last solo auctions. While the results of the California-only auction were as anticipated, the Quebec-only auction yielded both expected and less expected results.
What was not a surprise was that not all (83%) allowances offered for sale were purchased. Unlike in the California program, Quebec entities do not have to surrender any allowances this coming November. With their first deadline not until November 2015, Quebec entities have been understandably slow to enter and be active in the market. Another positive and not so surprising takeaway from Quebec’s last auction is high demand for 2017 allowances, a strong sign that Quebec companies are confident in this market’s future health.
More surprising to observers in Quebec’s recent auction, however, was that a higher percentage of 2017 vintage allowances sold than 2014 vintage allowances. Current 2014 vintage allowances can be used for compliance at any time, while 2017 vintage allowances can only be used starting in 2017. This longer useful life should make 2014 allowances more valuable and thus in higher demand, but this did not appear to be the case in the recent auction. Read More
Anna Doty contributed to this post.
A quick look back at California’s 2014 legislative agenda, which closed in the early morning hours of August 30th, shows it certainly was one for the record books. California took up major efforts to cut climate pollution and portion out billions in new investments, modernize the electric grid, and take on other not-so-small issues such as phasing out plastic bags. This activity happened while California led the nation in a remarkable economic rebound, continued to deal with an epic drought, and combatted the worst air quality in the U.S.
Among the many environmental issues in the spotlight this year, climate change, air quality, clean energy, water, and waste lead the pack.
Implementing a climate protection framework worthy of acclaim
On climate, lawmakers turned a corner by affirming the state’s commitment to AB 32 and green-lighting a new era of pollution reducing investments from the state’s world-class cap-and-trade regulation. Keeping transportation fuels within cap and trade starting January 2015 remained a main focus, with lawmakers facing and rebuffing numerous attempts by regulated industries and other legislators to undermine and delay the state’s landmark program. Throughout the session, lawmakers remained strong, demonstrating a commitment to the state’s growing clean economy and the need to capture the huge savings in health and fuel costs AB 32 will provide. Read More
For many people across the country, August is the last opportunity to enjoy the final bits of summer relaxation before fall sets in and the weather turns colder. While many people are away on vacation, the California Air Resources Board (CARB) and Ministry of Sustainable Development, Environment and the Fight against Climate Change (MDDELCC) of Quebec have been hard at work.
During the first week of this month, the two regulatory bodies held a practice joint auction for interested stakeholders to prepare for California and Quebec to officially join their quarterly auctions in November. A week and a half later, this past Monday, CARB held a California-only auction, the results of which were released today. Next week, MDDLECC will hold a Quebec-only auction, and finish out a very busy month for these linked cap-and-trade programs.
Amidst this flurry of activity, the results of California’s eighth quarterly auction, released today, show that the carbon market remains steady and strong. For the eighth time in a row, all current 2014 vintage allowances offered for sale were purchased. Current allowances sold at the same price as the last auction, $11.50, and 3.15 million more bids were placed than could be filled, reflecting healthy competition for credits. More 2014 vintage allowances were offered in this auction than in both of the previous auctions this year. This uptick in volume was due to the fact that a greater number of utility-owned allowances were turned over to CARB to be sold in this auction as compared to the previous two. 71 entities registered for this auction, which is similar to registration in previous auctions. This implies that there is sustained interest in the market and suggests that covered entities are actively planning how they will comply with the regulation. Read More