Category Archives: Global Warming Solutions Act: AB 32

Carbon Markets Reward 10 Pioneering States. Who's Next?

carbon_378x235A handful of states are already proving that economic growth and environmental protection can go hand in hand – and they’re using market forces, price signals and economic incentives to meet their goals.

These results are particularly salient as states consider how to comply with the U.S. Environmental Protection Agency’s plan to limit dangerous pollution from power plants.

So let's take a closer look at what's happening on our two coasts.

California: 4% cut in emissions, 2% growth

California’s landmark cap-and-trade program is closing out its second year with some strong results. Between 2012 and 2013, greenhouse gas emissions from the 350+ facilities covered by the program dropped by 4 percent, putting California solidly on track to meet its goal to cut emissions to 1990 levels by 2020.

During the same period, the state’s gross domestic product jumped 2 percent.

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Also posted in Cap and trade, Climate, General| Leave a comment

The Results Are In: 2013 Data Shows Capped Emissions are Down

rp_KHK-picture-200x300.jpgYesterday, millions of votes were tallied across the country and meticulously recorded to determine who would make up the nation’s next group of elected leaders. At noon yesterday, in the midst of this election activity, the California Air Resources Board (CARB) released a report of its own careful counting; not of votes, but of 2013 greenhouse gas emissions, collected under California’s Mandatory Greenhouse Gas Reporting program. Under this program, California’s largest polluters across all sectors are required to report their emissions and have them checked by a CARB-accredited verifier.

Covered emissions decrease

Today's report revealed that emissions currently covered by the state’s cap-and-trade program decreased by almost 4% to 145 million metric tons (MMT) of CO2E. This is 11% under California’s stringent cap of 162.8 MMT for 2013, indicating that the state is on track to reduce emissions back to 1990 levels by 2020. Complementary policies established under AB 32, such as the Renewable Portfolio Standard and the Low Carbon Fuel Standard, are almost certainly playing a significant role in keeping emissions down. Because these other measures drive reductions in emissions within the cap, the cap-and-trade program essentially functions as an insurance policy, guaranteeing the state meets or even beats its reduction targets.

California’s economy flourishes while companies comply with cap-and-trade

Total reported emissions, including those not covered under the cap-and-trade program, increased from 2012 to 2013 by a very slim tenth of a percentage point. Over this same period, California data shows that the state gross domestic product (GDP), a commonly used measure of the health of the economy, increased by over 2%. So, while the state’s economy grew, emissions did not grow proportionally with it, showing that it is possible to break the link between economic output from emissions output. Job growth in California throughout 2013 was also impressive, beating the national average.

 In addition to reporting emissions every year, regulated polluters must also surrender some emissions allowances each year. Yesterday, covered businesses did this for the first time, turning in enough allowances to account for 30% of their 2013 emissions. ARB confirmed that they saw 100% compliance with this surrender requirement, showing that businesses are ready and able to incorporate cap-and-trade obligations into their regular business practices.

Sights set on post-2020

As significant progress is being made towards the state’s 2020 goals, focus is beginning to turn to California’s ambitious long-term target: to reduce emissions down to 80% below 1990 levels by 2050.   To achieve this, CARB, the Governor's office, and some members of the legislature are calling for a midterm target to keep the state on a path to deep reductions.  Next year, we will take another important step towards this goal when transportation sector emissions, representing 38% of state GHG pollution, are regulated under the cap-and-trade program.

Today's results show that, as we prepare for these critical next steps, California has a strong foundation to build on with its cap-and-trade program. For more in-depth analysis of the emissions data released today, look out for EDF’s second annual report on California’s cap-and-trade program in January 2015.

Also posted in Cap and trade, Climate, General| Comments closed

How California’s Climate Policy is Saving the Forest and Preserving a Way of Life

rp_ca_innov_series_icon_283x204.jpgEDFs 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.
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Also posted in California Innovators Series, Ecosystem Restoration| Comments closed

Bridging the Credibility Gap: The Oil Industry’s New Anti-Cap-and-Trade White Paper

rp_erica-morehouse-287x377-228x3001.jpgMore 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 »

Also posted in Cap and trade, Clean Energy| Comments closed

Another Dishonest Attack on California’s Landmark Climate Law

rp_Tim-Oconnor-picture-228x300.jpgJust 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 »

Posted in Global Warming Solutions Act: AB 32| Comments closed

Strength in Numbers: Linked California-Quebec Market Benefits Environment and Economy

KHK pictureBigger 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 »

Also posted in Auction revenue, Cap and trade, Cap-and-trade auction results, Climate, Linkage| Comments closed
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