Category Archives: Cap and trade

Vive La Linkage: California and Quebec Working Together to Fight Climate Change

rp_KHK-picture-200x300.jpgThe holiday season is often considered a time to stop and take stock of the things that we are thankful for, and to celebrate the accomplishments of the past year. Today, California and Quebec have one more thing to celebrate: the successful completion of their first-ever joint cap-and-trade auction, which marks the last of many steps to fully harmonize the two carbon markets. Auctions are held quarterly and are opportunities for companies regulated by cap-and-trade and others to electronically bid on and purchase carbon allowances (permits to emit one metric ton of greenhouse gas emissions).

California and Quebec carefully prepare for full linkage of their programs

California and Quebec worked closely to design their cap-and-trade programs to ensure that the essential mechanisms and stringent targets were in place to allow for linkage. The jurisdictions both started their cap-and-trade programs on January 1, 2013, and formally linked their carbon markets a year later. At that point, carbon allowances originating from Quebec’s program could be purchased and used by a California company and vice versa. Until the most recent auction, the two jurisdictions held separate auctions, allowing time to update the auction system to handle bidding from multiple jurisdictions with different currencies, different time zones, and different requirements for the minimum allowable bid. This process of careful preparation culminated in a practice joint auction held at the beginning of August, which went smoothly according to reports from the California Air Resources Board (CARB), the regulatory agency responsible for overseeing the implementation of California’s cap-and-trade program.

Sustained strength of linked program reflected in results of first joint auction

The first real joint auction took place last Tuesday, after a great deal of preparation and some technical difficulties that caused a few days of delay. During this auction, companies from both California and Quebec bid together on the same collective pool of allowances, aligning allowance price over the two programs. The results of this auction were released today and revealed healthy demand in the linked market for cap-and-trade allowances. 100% of the current 2014 vintage allowances for sale in this auction were purchased by bidders at a price of $12.10, while 100% of the 2017 future vintage allowances offered were purchased at a price of $11.86.

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

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 Climate, General, Global Warming Solutions Act: AB 32| Comments closed

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 Climate, General, Global Warming Solutions Act: AB 32| 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 Clean Energy, 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 auction results, Climate, Global Warming Solutions Act: AB 32, Linkage| Comments closed

As California’s Legislative Session Ends, Key Environmental Protections Begin

Source: Flickr/jjkbach

Source: Flickr/jjkbach

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 »

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