Category Archives: Cap and trade

A Sustainable Urban Forest Takes Root in Santa Monica

ca_innov_series_icon_283x204EDF’s Innovators series profiles companies and people across California with bold solutions to reduce carbon pollution and help the state meet the goal of AB 32. Each addition to the series will profile a different solution, focused on the development of new technology and ideas.

Across the globe, trees in urban centers provide more than just curb appeal – they improve the quality of life and provide critical services like better air quality, reduced climate pollution, decreased urban heat and lengthened roadway life. These benefits amount to significant economic value– the USDA estimates that the 3.8 billion trees in U.S. urban forests represent a green infrastructure investment valued at $2.4 trillion.

According to Tree City USA and the Arbor Day Foundation, there are more than 3,400 communities, home to over 135 million Americans, which have community forest programs. Chances are, if you live in a major city, there is an urban forest program caring for the trees in your community.

Who: Public Landscape Division, Public Works Department, City of Santa Monica, California.

What: Santa Monica has planted over 1,000 trees and is piloting an advanced urban forest tree inventory and maintenance work order enterprise system. Their new software covers tree selection, planting and monitoring and enables Santa Monica to account for carbon sequestered in public trees.

Where: Santa Monica, California

Why: Santa Monica can improve its overall Urban Forest management while contributing to a healthier, climate smart city.

Unfortunately, maintaining the quality and cost-effectiveness of urban forest programs has remained a challenge for many towns and cities, as budgets and personnel are often stretched thin.  As a result, according to a 2013 report by the USDA, many of California’s municipal forest programs need improvement, and in fact, some are failing.

Enter Santa Monica, California, a modest-sized city of 8 square miles and home to approximately 90,000 residents. Located just west of Los Angeles on the Pacific Ocean, Santa Monica is home to surfing, celebrity hide-aways, and perhaps some of the more forward-thinking environmental policies in the state. Read More »

Also posted in California Innovators Series, Climate, Global Warming Solutions Act: AB 32, Offsets | 1 Response, comments now closed

Carbon Auction Results Show Stability Amidst Eventful Time for Cap and Trade

KHK pictureIt’s early in 2014, but it’s already been a busy year for cap and trade in California.

On the upside, several major developments have set off a series of conversations around the state’s landmark program, including Governor Brown’s plans for how to invest cap-and-trade auction proceeds to reduce greenhouse gas pollution. Similarly, the California Air Resources Board just released an update to the state’s AB 32 Scoping Plan, laying out the continued need to cut pollution across the Golden State. And, just this past week, Senators Fran Pavley and Ricardo Lara proposed a bill requiring the Air Resources Board to provide recommendations on post-2020 climate pollution reduction targets including for short-lived pollutants. 

On the flip side, new legislation was also proposed to exempt oil companies from the cap-and-trade regulation for the fuels they sell – instituting a carbon tax in its place.  At the same time, the California Chamber of Commerce renewed a year-long challenge to the legitimacy of cap and trade by appealing a prior court judgment that upheld the program.

Yet through all of this activity, one thing has remained certain: California’s landmark AB 32 cap-and-trade program remains a strong, stable and viable example of a successful carbon-cutting program.

Today, results of the cap-and-trade program’s quarterly auction were published and show that, for the sixth straight time, California businesses were able to successfully bid on and acquire allowances to fulfill their compliance obligations. This was the first opportunity to purchase 2014 and 2017 vintage allowances from the state, and every allowance offered for sale was purchased – a clear signal that companies are taking the program seriously.

Although overall demand for 2014 and 2017 credits was reduced compared to prior auctions, there were 6.29 million more bids than could be filled because of high demand. These conditions reflect continued interest in the market, coupled with an expectation of allowance availability in future auctions.

2014 vintage allowances, which can be used for compliance starting this year, sold for $11.48, which is 14 cents above this year’s floor price of $11.34. 2017 vintage allowances cannot be used for compliance until the year 2017, yet a complete sell-out of these allowances in last week’s auction at a price of $11.38 indicates that companies continue to be confident in the program’s strength and longevity. It is clear that companies remain focused on planning their compliance strategies despite recent distractions.

71 companies registered for this auction, representing all regulated sectors of the market, which shows California companies are factoring the cost of carbon into their financial strategies. This all leads up to November 2014, when companies will, for the first time, have to demonstrate they can satisfy a portion of their compliance obligations by holding enough allowances to cover 30% of 2013 emissions. The state raised an additional $130.7 million from this auction, which will be invested in further greenhouse gas reduction projects. At least $32.7 million of this money will go to projects that benefit disadvantaged communities in California – as required under state law.

It’s clear from this auction, and the five successful auctions preceding it, that California has a program that is working. It’s also a program that has support from the majority of Californians. Given the demonstrated staying power and the progress achieved in the first year of the AB 32 cap-and-trade program, it’s no wonder that the market has remained strong despite a flurry of activity surrounding the program.

Current Auction (2014 Vintage Allowances)
Number of allowances offered 19,538,695
Percentage purchased 100%
Settlement price $11.48

Advance Auction (2017 Vintage Allowances)

Number of allowances offered 9,260,000
Percentage purchased 100%
Settlement price $11.38

 

Also posted in Cap-and-trade auction, Global Warming Solutions Act: AB 32 | Comments closed

First Scoping Plan Update Lays Groundwork for a Low-Carbon Future

Erica Morehouse photoThe Proposed First Update to the AB 32 Scoping Plan (Proposed Update), released today by the California Air Resources Board (CARB), is a more focused and ambitious version of the document first released last fall that is part of a larger California climate strategy. Importantly, the Proposed Update continues to build a framework for significant post-2020 carbon pollution reductions needed for the state.

California is on the cutting edge of climate action but is not alone on the international stage when it comes to planning for the future. On January 22nd, the European Commission released a climate and energy plan proposing the EU reduce emissions 40% below 1990 levels by 2030.  Last November, Mexico announced plans for a carbon tax that will include offsets.  And last summer, President Obama released a Climate Action Plan that builds on much of California's success especially in the areas of reducing emissions from cars and trucks and controlling emissions from new and existing power plants.

CARB’s Proposed First Scoping Plan Update:

Recommends smart 2030 targets

This Proposed Update recognizes that not only do we need to dramatically reduce carbon pollution in the first half of the 21st century, but with commitment and planning it is an attainable goal. Achieving an 80% reduction from 1990 levels by 2050 will mean California must slash emissions across the board and CARB is recommending that every sector explored – transportation, energy, waste, water, agriculture, and natural and working lands – should have a sector-specific target.  It's appropriate that California first focused on big emitting sectors like energy and transportation, but sectors like agriculture and working lands which are harder to regulate can't be ignored as we consider long-term reduction goals. These sector targets will serve as guides for cutting pollution, driving innovation, and spurring investment in California.

Positions California as an international leader and collaborator

The Proposed Update recognizes that in order to remain at the forefront of international leadership, California must continue to lead by planning for reductions after 2020 and by continuing collaborations with other states, provinces, and countries that are taking action on climate change.

The Proposed Update identifies international sectoral offsets, such as Reducing Emissions from Deforestation and Degradation (REDD), as a potential key opportunity for California to help curb deforestation, the cause of roughly 15% of the world’s greenhouse gas emissions, while efficiently meeting the state’s domestic emission reduction targets.  The state’s engagement on REDD, along with the ongoing collaborations with China, Mexico, and other U.S. states, is a building block of meaningful global climate leadership

Provides economic opportunity

The Proposed Update articulates how economic opportunity goes hand in hand with innovative environmental solutions. California has enjoyed a strong economic recovery during the first year of cap and trade, but the state isn’t turning a blind eye to the challenges that lie ahead. California needs significant innovation before we can reach our target of 80% reductions below 1990 levels by 2050. CARB’s plan will encourage new economic opportunities and ways to cost-effectively reduce carbon pollution such as: carbon capture and sequestration, expanding the electrification of our personal car fleet, and developing reliable electricity storage. We can expect to see growth in low-carbon sectors, new clean energy jobs, and auction proceeds investments that will further strengthen local communities and businesses.

Prioritizes emission reductions in uncapped sectors 

This plan brings needed attention to emission reductions in sectors not regulated by cap and trade such as agriculture, working lands, water, and waste, and recommends setting sector-specific targets. CARB identifies pragmatic policies for these uncapped sectors such as incentivizing the efficient use of fertilizers and reuse of organic materials. CARB should continue to promote these opportunities, and recognize that pragmatic working and natural lands policies will also provide co-benefits such as more efficient water use.

As the saying goes, “A goal without a plan is just a wish.” CARB’s Proposed Update not only lays the groundwork for a low-carbon and clean-energy future, but points us towards strategic, and quantifiable, short and long-term goals – potential opportunities that will spark a much-needed conversation about what is possible as we approach 2030 and beyond.

Also posted in Global Warming Solutions Act: AB 32, Jobs, Offsets | Comments closed

Four Reasons California Cap and Trade had an Extraordinary First Year

Emily Reyna - 300dpi(This post first appeared on EDF Voices)

In California, we’ve just marked the one year birthday of the state’s landmark cap-and-trade program, a market-based approach to reducing the Golden State’s carbon pollution to 1990 levels by 2020. EDF thinks it’s a pretty big deal, and we’re not alone: the program weighed in at number one on Time’s top 10 green stories of 2013.

In lieu of cake and candles to celebrate the program’s first year and future potential, we've published the California Carbon Market Watch: A Comprehensive Analysis of the Golden State’s Cap-and-Trade Program, Year OneThis report is our comprehensive assessment of cap and trade’s inaugural year, and our analyses and interviews with market experts conclude that a strong, healthy, and enduring carbon market has emerged.

We know that California's program is still young and isn’t the world’s first emission trading program, or even the first in the U.S., so why are we so excited about this milestone? Here are the top four reasons we’re celebrating – and why the global community should, too:

1.      It’s a well-designed program off to a promising start. California has held five allowance auctions to date and they’ve all run smoothly. All emissions allowances usable for compliance in 2013 were sold, auction participation has been strong and allowance prices have remained stable and reasonable. In addition to successful quarterly auctions, a healthy secondary market over the first year suggests that regulated companies are purchasing allowances and thereby incorporating the cost of carbon pollution into their strategic planning. This successful start is due to a commitment to building a solid foundation of principles carried out under the highest of market standards.

Genesis343/Deviant Art

2.     With cap and trade in place, the California economy continues to recover. With a price signal now in place for emission reductions, regulated companies can flexibly decide how to reduce their pollution. In addition, clean energy companies and innovators are creating products and services that are transforming California to a clean energy economy. And money raised by the auctions will be invested in this clean energy future, and especially benefit communities hit hardest by climate change. These investments will boost clean tech in California, improve air quality, and create jobs.

3.     The foundation is set for a strong, long-term program. In 2015, California’s cap will more than double in size to cover 85% of the state’s economy and include transportation fuels, thus ensuring carbon pollution reduction from its largest source – transportation. And, there is already discussion in the state capital about the program’s future after meeting its goals by 2020.

With these positive indicators, we’re confident cap and trade is here to stay. The continued success of this program will also show the world that cutting carbon can be done efficiently and affordably, while driving innovation and growing an economy that builds healthier – and more resilient – communities.

4.     The world is watching…and is starting to act.The program is the most comprehensive and ambitious in North America, in both the sheer size of the state’s economy (the 8th largest in the world) and the number of sectors covered. Cap and trade is not only cleaning up California, it’s also serving as a model to build a comprehensive solution to the global climate crisis.

If we want to move the needle on climate change, it will take a global community to make it happen. The state’s carbon market is an important step, and we hope other jurisdictions will follow our lead to create market programs of their own.

In the past year alone, there are promising signs of collaboration beyond California’s borders: the Golden State has formed a series of important partnerships including linkage with Quebec, a non-binding agreement with Oregon, Washington state and British Columbia to establish a regional climate plan, a Memorandum of Understanding (MOU) with China which launched seven of its own pilot trading programs last year, and a MOU with Australia to guide collaboration in addressing climate change.

With California as a shining example of what is possible, I'm confident that others will continue to join the fight. So, happy first birthday California cap and trade. May the years ahead be as bright as the first.

Also posted in Cap-and-trade auction, Clean Energy, Climate, Global Warming Solutions Act: AB 32, Linkage | Comments closed

A “Virtuous Cycle” of Low-Carbon Investments Especially for California's Most Disadvantaged Communities

Erica Morehouse photoCalifornians will see a “virtuous cycle” of low-carbon investments begin as cap-and-trade auction proceeds finally head out the door starting this summer.  This is the news from the Brown administration this week detailing how they propose to start investing dollars from 2014 carbon auctions while beginning to repay the $500 million borrowed last year.

We are especially excited to see that California's most disadvantaged communities — the ones that have suffered environmental burdens for years and will be hit hardest by climate change in the future — will see more than the mandated 25% of auction proceeds invested for their benefit.  Consistent with an investment plan released last year, there will be three major categories: sustainable communities and low-carbon transportation, energy efficiency and clean energy, and natural resources and waste diversion.   Clean transportation and sustainable communities will receive the largest chunk ($350 million) of the proposed $850 million investment.  This means we will see investments in solutions such as clean trucks and buses, electric vehicle rebates, zero-emission freight demonstration projects, and enhanced connectivity and modernization for public transit in disadvantaged communities.

Investments like these will create big wins for California’s most at-risk communities.

Consider this: Diesel trucks and buses are the single-largest source of toxic diesel pollution in the state, causing cancer, heart attacks, breathing emergencies, lost days at work, and even premature death.  Similarly, alternative personal vehicles like those with electric batteries can provide benefits to communities.  A recent study by ICF and an earlier study from UC Berkeley both showed significant benefits from investments in clean transportation and other low-carbon investments which include job creation, increased gross state product, and increases in personal incomes, not to mention indirect health care savings.

Why do we call this a “virtuous cycle” of investment?

The economic benefits are not simply the direct benefits you may think of first, such as job growth in areas like manufacturing and selling clean trucks, buses, and vehicles.  Research also shows that when you save $1 on energy costs — which would more than likely go to an international oil conglomerate — the benefit to the economy is $16.

How does this work?  Instead of sending those dollars overseas, you're most likely spending them in your community, on local products and services.

Today, Governor Brown committed to the first of many critical cap-and-trade investments in disadvantaged communities and cleaner options for Californians. With this new virtuous cycle of investment, we expect these and subsequent investments to pay dividends to the health of our citizens, our environment, and our economy for years to come.

Also posted in Auction revenue, Global Warming Solutions Act: AB 32 | Comments closed

California’s Pioneering Spirit Endures under Cap and Trade

KHK pictureCalifornia’s state motto is “Eureka,” (Greek  for “I found it”) referring to the discovery of California gold in 1848. Shortly thereafter, the Golden State quickly became the land of opportunity, spurring new technologies and catapulting California to the forefront of global innovation.

While California may no longer be flush with gold, it remains a leader in emerging industries, innovation, and technology.  In 2013, it stayed true to its pioneering spirit with the successful launch of the state’s ambitious cap-and-trade program, which is now attracting international interest.

All metrics indicate that a strong, healthy, and enduring carbon market was established in California during its first year of cap and trade, amidst a recovering economy and continuing job growth . The state has seen five successful auctions of carbon credits and an actively traded secondary market. Through this market mechanism, California has placed a price and a cap on carbon pollution while holding the state’s top polluting companies accountable for spewing harmful emissions.  Carbon credit prices have been both reasonable and stable, evidence of a smooth transition to a capped economy with none of the catastrophic results predicted by the program’s opponents.

To mark the one-year anniversary of cap and trade in California, EDF will be releasing an in-depth analysis of the program’s first year on January 8th. This report examines the state’s progress in implementing the cap-and-trade regulation and includes market performance analysis by industry experts and academics, details on auction outcomes and identification of trading trends on the secondary market. It also covers updates regarding ongoing litigation, proposed regulatory amendments and international collaboration. From the extensive data presented in this report, it is evident that cap and trade in California is off to a successful start.

Though challenges lay ahead, there is no doubt that California will rise to the challenge of accommodating the emerging carbon market. As it did during the Gold Rush, the state will continue to develop new technologies and build infrastructure while serving as a model to the world.

With the close of the first year of cap and trade, it is clear that California has found something more valuable than gold – a viable cap-and-trade program that gives the state a chance to address climate change, one of the biggest challenges of our time, and usher in a new era of opportunity and prosperity.

Also posted in Cap-and-trade auction, General, Global Warming Solutions Act: AB 32 | 1 Response, comments now closed

13 for 13: The Stories that Defined California Environmental Leadership

There is never a dull moment on the California environmental policy scene, and 2013 was particularly action-packed.  Everywhere you turn there seems to be a new innovative solution or a fresh example of a company, city, organization, or individual making a profound difference in putting the Golden State on the path to a clean energy future.  Environmental Defense Fund (EDF) has the privilege of being in the middle of many of these groundbreaking developments, and in the past 12 months, California has taken a number of exciting steps forward.

What follows is our “13 for (20)13” recap of the most consequential stories in the California climate change and energy policy world, in our own words.  From celebrating the one-year anniversary of a successful carbon market to forging partnerships with other states and countries to marking continued innovations and opportunities in clean energy and fuels, it has been quite a year.  Here’s to an even better 2014.

 

1. California’s Carbon Market Caps off Successful First Year of Auctions:

The results of California's fifth carbon auction were released today, marking an important environmental milestone for the state – one year since the debut of its cap-and-trade system.

2. California’s LCFS Ruling is a Win for Consumers and Alternative Fuels Companies:

Last week, we saw a big win for California's Low Carbon Fuel Standard (LCFS) – a regulation to diversify the state’s fuel mix with lower carbon sources of energy.  After almost a year of deliberation, the United States 9th Circuit Court of Appeals filed a decision in the case Rocky Mountain Farmers Union, et al. v. Corey, in favor of California.

3. LASER: Turning the climate threat into a story of opportunity for Los Angeles:

I’m an L.A. guy, so I like to think about things in epic story lines. And with today's launch of EDF and UCLA’s Luskin Center for Innovation new "LASER" maps (Los Angeles Solar & Efficiency Report), I think we’ve got a real blockbuster on our hands.

4. A Blueprint for Advancing California’s Strong Leadership on Global Climate Change:

A key reason California has become a global leader on climate change is its ability to successfully adopt the Global Warming Solutions Act, the state’s climate law that uses market-based tools to significantly reduce the state’s greenhouse gas emission levels. A group of tropical forest experts has now presented a blueprint for how California can secure significantly more reductions in global warming pollution than the law requires, while keeping pollution control costs down and helping stop the catastrophe of tropical deforestation.

5. Scoping Plan 2.0: Taking Action Today for a Clean Energy Future:

Today, the California Air Resources Board (CARB) released its draft 2013 Scoping Plan, the blueprint outlining how the State will address climate change over the next five years, reach its goal of reducing greenhouse gas emissions to 1990 levels by 2020, and create a path for even deeper reductions beyond 2020.

6. Seeing Green: Emission Reducing Fuel Policies Help Lower Gas Prices:

Californians struggling with high gas prices should feel optimistic about the future.  A new memo [PDF] by economists from EDF and Chuck Mason, a prominent economist at the University of Wyoming, demonstrates that policies established to reduce emissions and help the state reach its climate change goals also help to arm consumers at the pump

7. At a Key Moment for Energy, California Should Seize Demand Response:

Traditionally, if an area’s population grows — or it loses a power plant — it needs more energy. But California and some other states can approach it differently and reduce the use of fossil fuels. Instead of asking, How can we add more energy?” the real question becomes “How can we reduce demand?”

8. Offset Market Alive and Well in California:

Congratulations to the California Air Resources Board (CARB) as they announced plans to issue the first CARB Offset Credits or ARBOCs.  These 600,000 metric tons of offsets helps the state move closer towards our emissions reductions goals.  Compliance entities, such as utility and oil and gas companies, can use these offsets to meet up to 8% of their compliance obligation

9. Environment: California didn't do so badly this year:

Despite some particularly unexplainable losses if you care about protecting the environment, the California Legislature made progress in 2013. The range of bills on the governor's desk awaiting his signature confirms that California remains the stalwart energy and climate leader in the country.

10. Historic Agreement Demonstrates Broad Commitment to Build Clean Energy Economy:

With the stroke of a pen, North American efforts to combat climate change and promote clean energy reached a new level today.

11. Hopeful signs for U.S. and Chinese Cooperation on Climate Change:

The past week has offered a thrilling glimpse into the future for the millions of people around the U.S. and across the world who are yearning for real solutions to climate change.  On June 18, Shenzhen, an economically-vibrant city of 15 million on the South China Sea, launched the first of seven Chinese regional pilot carbon market systems slated to begin by the end of 2014.

12. Major California Refineries Logging Big Pollution Reductions Under AB 32:

It is well-documented that petroleum refineries release large amount of pollutants that are harmful to the environment and make people sick.  In California, these refineries are among the largest sources of carbon dioxide, accounting for 7 of the top 10 sources for climate pollution. According to data from the U.S. Environmental Protection Agency, refineries can also emit large amount of toxic compounds, including carcinogens and respiratory irritants.

13. Ruling gives bright green light for investment in pollution reduction projects in California:

California’s landmark clean energy bill AB 32 received a big boost today from the San Francisco California Superior Court in the case Citizen’s Climate Lobby et. al., v. California Air Resources Board.

Also posted in Clean Energy, Energy Efficiency, Engaging Latinos, Global Warming Solutions Act: AB 32, Linkage, Low Carbon Fuel Standard, Offsets | 1 Response, comments now closed

California’s Carbon Market Caps off Successful First Year of Auctions

Emily Reyna - 300dpiThe results of California's fifth carbon auction were released today, marking an important environmental milestone for the state – one year since the debut of its cap-and-trade system.

While international climate discussions drag on in Warsaw, Poland, today's milestone is further demonstration of the importance of California’s continued leadership on climate action, putting the world’s first economy-wide cap on emissions, and using a market mechanism to put a price on carbon. Today's results cap off a successful year. As our one year report in January will show- the auctions have run smoothly, allowance prices have remained stable and reasonable, and compliance entities are participating. In addition, allowances are selling, official offsets have been issued, Quebec linkage will begin in under 2 months and legal uncertainty has been lifted. Congrats California, the positive momentum of your smart climate policies continues on both strong legal and policy footing.

Overview of fifth auction results

For the second auction in a row, all current and future allowances sold, demonstrating continued viability of the market and bringing total state auction proceeds to more than $530 million. That money must be invested in projects that reduce climate pollution, and at least 25%, or over $130 million to date, will provide clean energy opportunities to disadvantaged communities.

nov13 results

This week 16,614,526 current (V13) allowances sold at $11.48 and 9,560,000 future (V16) allowances sold at $11.10.  For V13 allowances, there were almost 2 times more credits bid on than were sold which demonstrates strong demand in the market. As was expected by analysts, the fifth auction showed a lower settlement price than in previous auctions. This is normal for end of year auctions as many of the covered entities have likely already purchased the allowances they need to cover their 2013 emissions targets.  Still, the complete sale of allowances indicates participants are confident the market is here to stay and are serious about preparing for future compliance obligations.

Keeping our eyes on the prize of reducing emissions

We are steadfast in ensuring that this first year is just the beginning; California's cap-and-trade program and emission reduction goals remains robust, with life beyond 2020.

As documented by the CalEPA, the impact of climate change is already affecting the state in the form of more frequent and intense wildfires, shrinking glaciers and snowpack, and hotter temperatures. In fact, 2013 is predicted to be the driest year ever recorded in California. With this data, we can't afford not to reduce our emissions to avoid the worst impacts of climate change.

As expected, cap-and-trade is a working solution. It is incentivizing the state's dirtiest polluters to find innovative , low-cost solutions to reduce emissions and is garnering interest at home and around the world. In the spirit of the season, we are thankful that this first year of auctions has been remarkably successful; that the economy is recovering and that the state is on track to meet its 2020 emission reduction goals.

Also posted in Cap-and-trade auction, Climate, General, Global Warming Solutions Act: AB 32 | Comments closed

One Year Later, Carbon Auctions Thriving in California

KHK pictureAt this time last year, an 11th hour lawsuit was brought by the California Chamber of Commerce on the eve of the state’s first carbon auction —and with it a wave of questions aimed to cast doubt on the landmark program. Will the auction actually happen? Will companies participate? Will allowances sell?

What a difference a year makes.

Since the first auction took place in November of 2012, we’ve come to find out the answers to those questions are – yes, yes, and yes. And, despite attempts to create uncertainty and confusion it’s held true for all four auctions to date.

The Golden State’s carbon market received another dose of confidence last week when state courts upheld California's ability to auction carbon allowances and hold polluters accountable for their harmful emissions.  The ruling came just in time for the state’s fifth auction, which will take place tomorrow.

While the court decision is good news for cap and trade, perhaps even better is the progress that participants and other stakeholders have made in their discussions about the market over the past year.  From the 2013 California Carbon Summit to a recent Lawrence Berkeley National Laboratory Report, discussions are turning to the future of the carbon market post-2020 and potential linkages with other emissions trading programs.

A year later, the overwhelming sentiment is that the carbon market is here to stay.

Part of this confidence stems from the auction results themselves. In the last auction, all 2016 vintage allowances offered were purchased, signaling belief in the future of the carbon market, as these allowances cannot be used before 2016.  In addition, California companies have become more comfortable participating in the carbon market. This is reflected in the healthy volumes traded daily on the secondary market and the increased stability of prices over the past few months.

The settlement price for 2013 vintage allowances for tomorrow’s auction is forecasted to be lower than that of the previous one, which doesn’t indicate a weak market but rather the increased understanding that compliance will be less costly than previously expected. However, with a floor price of $10.71, which will continue to increase every year, a strong price signal for clean energy improvements remains.

Furthermore, the latest 2012 emissions data released by the California Air Resources Board show an increase in emissions from 2011 in California. This was expected for several reasons including the closure of the San Onofre Nuclear Generating Station, the shortage of hydropower generation in 2012, and the state’s significant economic recovery  during that time. California’s economy continues to rebound and the cap-and-trade program will play an important role in the landmark achievement of decoupling this economic growth from growth in carbon pollution that threatens our communities and the world.

Creating an entirely new market around the buying and selling of carbon emissions has been a long and rigorous process, but California’s record over the last year proves it is possible. Look out for EDF’s complete analysis of the successful first year of cap and trade in California at the beginning of 2014.

Also posted in Auction revenue, Climate, Global Warming Solutions Act: AB 32 | 1 Response, comments now closed

Historic Agreement Demonstrates Broad Commitment to Build Clean Energy Economy

With the stroke of a pen, North American efforts to combat climate change and promote clean energy reached a new level today.

I was lucky enough to witness the historic event, as Governor Jerry Brown joined the leaders of Oregon, Washington State and the Canadian province of British Columbia, to sign an agreement that formally aligns climate and clean energy policies in the four jurisdictions.

This signing by these “Fab Four” of the Pacific Coast Collaborative makes sense given all they have in common: they’re geographically connected, share infrastructure, and their combined regional economy accounts for a $2.8 trillion GDP, making it the world’s fifth largest economy.

Beyond the symbolic nature of today’s announcement, the event signals California’s far-reaching influence on energy and climate policy development.

Once labeled the “go it alone” state, California is now succeeding with its “lead by example” approach.

What has driven this success? Most recently, the Golden State established the world’s most comprehensive cap-and-trade program, a proven and sensible environmental and economic approach to limiting greenhouse gas emissions. Once considered a “grand experiment,” its early success has helped to establish a strong, viable market and spur interest from around the world.

Today was no exception, as business, labor and environmental leaders from all four jurisdictions joined the signing, signifying a strong regional commitment to putting a price on carbon, using market mechanisms to spur a clean economy and reduce pollution on a regional scale.

The agreement is also further proof that strong climate and clean energy policies are tied to economic benefits, creating a large market for innovators and low-carbon businesses in the region. California is on the brink of linking its cap-and-trade program with Quebec’s; making the two states’ carbon allowances interchangeable and showing growing carbon market momentum.

Today’s event is a beacon of hope for national and global action to fight climate change.  While the four parties in this agreement are in different stages in putting a price on carbon, their combined commitment is a positive sign and further impetus for regional and international collaboration. The vision of these four leaders – along with California’s proven record of success – makes me very optimistic that we are on the right path.

Also posted in Clean Energy, Climate, Linkage, Politics | Comments closed