Category Archives: General

California's Cap and Trade Program After Six Months: Three Reasons the Momentum is Here to Stay

Six months ago, California launched the largest economy-wide cap-and-trade program in the world, in what many have deemed a grand experiment.  Many people watched nervously as the market unfolded, despite California having applied the lessons  learned from the growing pains of the EU ETS and from six years of crafting the market rules in consultation with the state’s – and the world’s – leading experts. Results from the first and second auctions eased those initial fears and today's results continue to affirm the presence of a strong and viable market. That's good news for California.

 

 

Auction Results

The third auction held on Thursday, May 16th offered 14.5 million 2013 allowances for sale and 9.56 million 2016 allowances. So, what happened?

Summary

Allowance year Allowances offered Allowances sold Settlement price
2013 14,522,048 100% $14.00
2016 9,560,000 78.6% $10.71

Participation: Overall participation was high, with almost 1.8 times more credits bid on than were sold. A diverse array of 81 entities were approved to bid in the auction.

Current (2013) vs. Future (2016) vintage allowances: All of the 2013 allowances sold, while almost 80% of the 2016 allowances sold, an indicator that there is solid confidence the program will still be around. Entities are keeping their options open in not buying all available allowances for use three years out, which makes sense given the multiple options for achieving compliance.

Clearing price: As expected, the clearing price for 2013 allowances was high, settling at approximately 30% above the auction price floor of $10.71. Because 2016 allowances did not sell out, their clearing price remained at the floor of $10.71.

Auction proceeds: By selling more than 10 million state-controlled allowances, California's third auction raised over $117 million – that will be used to advance the goals of AB 32, to reduce climate pollution. The budget is still being finalized for this year, but at least 25% of the auction proceeds (or $64 million to date) must benefit disadvantaged communities.

Three Reasons to the Momentum is here to Stay

  •  California’s Program is Proving to Be a Strong Model for Replication Elsewhere: Others are watching California's program closely. In a short period, a price on carbon has been established, all credits at the first three auctions were sold above the floor price, and most importantly, we have begun the process of breaking California’s dependence on fossil fuels and seen a decrease in carbon emissions.

Next year, Quebec will link with California's market – a first step towards a broader carbon market, and potential blueprint for other states and provinces to join the program.

  • Innovation: Smart companies are innovating to reduce their emissions. For example, Kroger Company uses an anaerobic digester in Compton, California to convert spoiled food to energy, generating 13 million kilowatt-hours of electricity a year. Unleashing this type of innovation accelerates the clean energy revolution and puts us further along the path to meeting the state’s aggressive climate goals.
  • Future Leadership: Today, EDF kicked off its sixth year of EDF Climate Corps, an innovative fellowship program that places grad students in companies, cities and universities to identify energy savings within those organizations. This year, 116 graduate students will be working in over 100 organizations this summer — 19 in California — including Apple, Adidas and the Los Angeles Community College System. Many of the alumni continue the work they do in corporate, public and non-profit spaces to address the largest environmental issue of our time. As Van Jones said at the Greenlining Institute Summit last week, “young people are fighting for us.”

We have solid reasons to be optimistic about California’s carbon market, and the continued growth of the clean energy economy. The skeptics aren’t staying silent, but their case is losing steam.  After all, facts are facts, and for California, today’s auction results proved once again the numbers are on our side.

 

Also posted in Cap-and-trade auction | Leave a comment

Cream Cheese and Time-Of-Use Electricity Pricing

“The cream cheese just fell off the roof of the car,” my 7-year old daughter said as I turned into my driveway after a trip to the grocery store.  Right now you might be asking yourself, “What does this have to do with time-of-use pricing?” Allow me to explain.

We live in Alameda, CA, where plastic bags are prohibited and stores must charge for a paper bag. Alas, I had forgotten to bring a reusable one.  To teach my children a lesson and avoid the public scorn (not so much the $0.05 per bag), I carried our groceries and asked the kids to lend their hands. And yes, I put the cream cheese on the roof of the car to free a hand to unlock it.

Once home, I realized that, in addition to almost losing my cream cheese, I’d been making potentially risky tradeoffs.  After all, exiting the supermarket with full hands prevented me from holding my children’s hands while crossing a busy – and dangerous – parking lot.

Don’t get me wrong; I’m not lamenting the ban on plastic shopping bags.  I think it makes perfect sense, but it takes time to start making the adjustment and the risk tradeoffs aren’t always obvious.

This scenario– making adjustments that may seem inconvenient and a bit scary, but are well worth the effort– plays out in other areas of life as well.  Particularly in rethinking how Americans use and pay for electricity.

Most of us don’t think about how the time of day affects the cost of serving us power.  In California, we aim to change that by moving to Time-of-Use (TOU) pricing – which will make electricity more expensive during times of peak, or high, energy demand and cheaper off-peak.  In fact, just yesterday, the Sacramento Municipal Utility District (SMUD) recommended moving all residential customers to time-of-use rates by 2018 in an effort to give customers more control over energy costs.

EDF believes that TOU pricing will be best for people and the environment, just as banning plastic shopping bags effectively reduces their environmental impact.  This approach can encourage conservation and reduce peak energy use while providing customers with more choices that can ultimately lower their monthly bills.

Switching to TOU electricity pricing may feel to some like being thrust into a busy parking lot with an armload of groceries and two children to monitor.  When should I use my dishwasher?  Do I need to reset my air conditioner?  Well, yes and no.  You can choose to do nothing, or you can exercise a choice you don’t have with our current pricing structure: shifting energy use to times of lower electricity prices.  It’s quite doable.

A recent survey of nearly 5,000 customers by PG&E and So Cal Edison found that 75 percent have tried shifting their energy use already – even though they don’t get paid to do it.  Two-thirds of respondents said they’d be willing to risk higher bills for the chance to save energy for environmental purposes.  This willingness, combined with wise policies – such as the “Try-Before-You-Buy” bill protection that prohibits bill shocks for up to one year after a customer changes rate plans – bodes well for the union of can-do attitudes and technology innovations like digital electricity meters and automated “set-it-and-forget-it” learning thermostats.

The rewards will be significant: TOU pricing will reduce the amount of peak electricity needed from dirty fossil fuel “peaker” power plants, thereby avoiding costs from blackouts and new energy infrastructure investments.  It can also help to incorporate more renewable, clean energy resources onto the grid – like wind and solar – with significant benefits for energy independence and reduced air pollution that will put us on a pathway toward stabilizing our climate.

Most consumers will see lower energy bills from TOU electricity pricing without doing anything.  Others will need to make adjustments, particularly homes that use a lot of energy during peak energy times of the day.  With a little planning, knowledge and helpful technology, it can be as easy as keeping extra shopping bags in your car.

Just as banning plastic bags is helping to reduce environmental degradation, so too can TOU electricity pricing.  We just need to get comfortable with the idea.  That way we can have our cream cheese and clean environment, too.

Also posted in Clean Energy | Comments closed

California Leading the Way to Clean Energy Innovation While a Few Lag Behind Investing in Litigation, Obstructionism


Climate pollution threatens the health of California’s families and the prosperity of our economy. Last November, California began a vitally important program that reduces climate pollution, rewards clean energy innovation, and helps ensure that the biggest emitters are responsible for their own pollution.

The program places a firm limit on overall climate pollution from the largest industrial emitters in California, allows flexible solutions to achieve that limit across sources, and requires major industrial emitters to bear a small portion of their pollution costs by requiring them to obtain carbon emissions allowances under the state’s cap-and-trade program, under which allowances may be obtained in public auctions or trades on the open market.

Fast forward five months, Californians are already realizing critical health and economic benefits from this groundbreaking environmental policy.  And, the Golden State continues to lead the way in clean energy and transportation jobs due in large part to AB 32, which has opened the door for greater investment in the clean energy economy. More good news: Yesterday, the state fulfilled a requirement of 2012 AB 32 Legislation by releasing its blueprint for how to expand these benefits by investing proceeds from auctions to strengthen our economy, our health, and the environment.

California’s plan focuses on making key greenhouse gas reductions in three sectors: transportation, energy, and natural resources. The goal is to create multiplier effects that allow Californians to draw benefits from these opportunities that far outweigh the investment.  And every day new research shows just how widely the benefits of clean economy investments can ripple.  EPA recently released a study showing that if energy costs accounted for the health impacts of burning fossil fuels, they would increase by between $361 and $886.5 billion annually.  When California invests in clean energy those hidden health benefits accrue for years to come – and they protect our families and our children.

Yet some polluters in California lag behind California’s innovative clean energy economy.   They continue to delay, deny and obstruct.  On the same day the state released its plan, the Pacific Legal Foundation (PLF), on behalf of certain companies, filed a lawsuit challenging whether California could auction carbon allowances at all.  The timing was no coincidence; a similar lawsuit was filed last November the day before California’s successful first auction.  So it comes as no surprise to see PLF attempt to block the good news for California’s clean energy economy.

So who’s behind the lawsuit?  The usual suspects.  The Pacific Legal Foundation (PLF) has a long history of being a loyal partner to special interests like big tobacco in its effort to avoid legal responsibility for the health impacts of cigarette smoke.  More recently, PLF petitioned the United States Supreme Court to reconsider EPA’s scientific finding, affirmed by a unanimous panel of judges in the U.S. Court of Appeals, that climate pollution negatively impacts human health and welfare.

Given PLF’s history, it’s not surprising that the group has chosen to focus its obstructionism on California’s most important health and environmental regulation.  But it is unfortunate.  As Californians work together to address dangerous pollution and strengthen our economy, PLF and its allies lag behind yet again, investing in litigation rather than innovative solutions to urgent societal challenges.

Also posted in Climate | Comments closed

California’s Secret to Green Jobs and a Thriving Clean Economy? It’s Policy.

California has a thriving clean economy. In fact, the Golden State boasted more green jobs in clean energy and transportation last year than the other top 4 states combined, according to a new report by Environmental Entrepreneurs.

Here are some more highlights:

Innovation – The state is a hub for clean energy innovation. Clean technology patents grew by 26 percent in the past 2 years, outpacing the country and the rest of the world.   It is the “undisputed leader in solar technology patents” according to Next10.org, with totals greater than the cumulative solar patents of the next eight highest states. 

Energy Generation – Total renewable energy generation has grown 28 percent between 2007 and 2011 and wind energy has doubled during this same period.  Earlier this month, the state broke its own record for solar power – over 15,394 megawatt-hours of power to the grid, enough for every Californian to keep a 100-watt bulb lit for four hours.  Not to be outdone, the state also surpassed 4-gigawatts of wind power – similar to what California's two nuclear plants can churn out at full power, or enough to momentarily supply over 2.5 million homes.

Jobs – Green jobs are growing four times faster than the rate of all other jobs nationwide, with the majority happening in California according to the Bureau of Labor Statistics.  EDF’s analysis of California’s clean economy finds that jobs in core sectors like energy efficiency, renewable energy, clean transportation, and advanced storage and materials have not only remained resilient during the worst of the Great Recession (2008-2010), they outpaced all other job growth and grew 109 percent from 1995 to 2010.

Green jobs are also good jobs in California.  They are diverse, across a wide range of education-level and skills, and almost half of all jobs in the clean economy don’t require a college degree according to the Brookings Institution.  On average, green jobs offer a higher median wage and career advancement opportunities. An analysis by Philip Romero, the former Dean of CSU Los Angeles College of Business and Economics finds that “workers command wages with a 50-to-100 percent premium over the average job,” and estimates that the overall clean economy will grow “by at least 60-to-100 percent” by the late 2030’s.

Something exciting is happening in California, and at this point you may be wondering what our secret is? 

It’s policy.   California boasts a legacy of innovation stemming from the state’s leadership in environmental policy – it happens here first and it transforms markets.  It is evidenced in everything from improved tailpipe emission standards and higher performing gas mileage in cars, greater efficiency in household appliances, and greener building practices that has transformed the sector and created hundreds of billions of dollars in economic value.  All these innovations started with policy

I believe good stuff can happen when you set clear policies that signal markets and influence behaviors.  There is a reason why 24 percent of hybrid and 32 percent of electric vehicles in the US are registered in California:  good policy that led to better cars and consumers who could see the improvement to their bottom line at the gas pump.  California leads in renewable energy, efficiency, and clean transportation in strong part because of strong policies like AB 32 which puts a price on carbon and sets a statewide Renewable Portfolio Standard, providing a clear market signal for greater investment in clean technology.

And by the way, someone local has to install all those solar panels and wind turbines, weatherize all those homes, as well as maintain and operate all those buses and rail cars – good jobs in the clean economy follow smart policy.

It turns out that California’s “secret” to growing green jobs and a thriving clean economy is not so secret at all…it’s good policy.

Also posted in Clean Energy | Tagged , , , | Comments closed

Rice Protocol – First Crop-Based Agriculture Offset in Landmark California Climate Program

Yesterday the California Air Resources Board (CARB) launched a rulemaking process to develop a rice carbon offset protocol.  EDF is excited about the development of this protocol – it is a market-ready solution which paves the way for the agriculture sector to participate in California’s landmark cap-and-trade program.  The agriculture sector represents a potential of more than 100 million metric tons by 2020.  At today’s prices that represents more than $1 billion in carbon offsets revenue for growers and landowners.

Rice farmers are leading the way on developing crop-based offsets.  This isn’t surprising.  The rice industry has long been at the forefront of agricultural-environmental innovation – whether it is conserving critical habitat for 230 species of wildlife to modernizing irrigation and pesticide management.  From research to modeling methane management practices to developing a protocol to pilot practices in the field, no other farming sector has done this amount of work to scientifically prove compliance-grade credits from the agriculture sector.

Through developing this protocol CARB sends a signal to rice farmers specifically and all farmers in general that growers can generate additional revenue by adopting practices that reduce greenhouse gas emissions without having an adverse impact on yield.  What is equally as important is to do this in a way that allows multiple landowners to aggregate their fields into a larger project that can reduce transaction costs.

EDF looks forward to continuing to work with CARB to develop protocols that generates high quality, environmentally sound offsets from U.S. agriculture.

Also posted in Climate, Ecosystem Services, Sustainable Agriculture | Comments closed

Auction results present golden opportunity for California landowners

Last Friday, results from California’s second cap-and-trade auction were released and by all accounts it was a huge success. More importantly, it sent a signal that this is a strong and viable carbon market and presents a golden opportunity for landowners.

Through agricultural offsets, landowners have the potential to provide companies a lower priced option for meeting California’s greenhouse gas targets than available through the auction. Companies that must meet the requirements of the cap-and-trade program are allowed to use offsets for up to 8 percent of their greenhouse gas obligation and the price of carbon is going up with each auction — there was a 27 percent increase in the price of allowances between the November and February auction, from $10.09 to $13.62 per metric ton.

The California Air Resources Board (CARB) has approved four types of offset projects for use under California’s cap-and-trade program: forestry (improved management, avoided conversion, and reforestation), livestock methane capture and destruction, refrigerant destruction (limited to specific ozone depleting substances), and urban tree planting. At the end of March, CARB will start a rulemaking process for the consideration of two new protocols – rice cultivation and coal mine methane destruction. EDF is working closely with stakeholders throughout the U.S. to help develop and implement a rice protocol.

A related and positive development for the offset market occurred on December 14, 2012 when the Climate Action Reserve and American Carbon Registry were named as official "Offset Project Registries." The registries can now issue offset credits from protocols that have been approved by CARB. As additional agricultural offset protocols are approved, farmers throughout the United States can begin offering agricultural offset credits to companies to help them comply with California’s cap-and-trade program. We expect the first offsets to be issued by the registries and approved by CARB in the next three months.

While prices vary by year and type of offset, offsets were trading between $10 and $12 per metric ton prior to the second auction. This price will go up now that the results of the auction have been released. This means that agricultural producers will have an opportunity for a new and steady income stream for their conservation stewardship and for being part of the climate solution.

To learn more about agriculture's ability to offset climate change please visit EDF's web page here: http://www.edf.org/climate/agricultures-ability-offset-climate-change.

 

Also posted in Climate, Ecosystem Restoration, Ecosystem Services, Sustainable Agriculture | Comments closed

Results Are In: Auction Continues California’s Winning Streak to Fight Climate Change

Three months ago California officially opened its world class cap-and-trade program for greenhouse gas pollution – establishing the first ever carbon price in the Golden State and leading the nation on a path toward true climate change action.

Earlier this week, California’s march toward meeting emissions reduction goals was bolstered with a second auction of carbon allowances in the cap-and-trade program, and just today, the results of that auction were released.  All signs point to marked success for the program in the second auction, and suggest California is on its way toward fully realizing the goals of the Global Warming Solutions Act of 2006 (AB 32).

As shown by the results released at noon today, overall participation in the February 19, 2013 auction was high, with almost 2 ½ times more credits bid on than were sold.  Initial reports show this has beaten all market expectations, and the clearing price of $13.62 suggests a strong belief in the longevity of the overall program.

By selling more than 7 million state-controlled carbon allowances, California’s second auction also raised about $83.5 million  – money that will be used to advance the goals of AB 32. Furthermore, since recent legislation was passed in 2012 that requires at least 25% of the auction proceeds to benefit disadvantaged communities, this auction will inspire more than $20 million in investments that can benefit Californians in need.

With respect to who participated in the auction, market statistics show there was approximately a 25% increase in the number of qualified auction participants as compared to the last auction.  This increased participation was no doubt partly responsible for the fact that 2013 credits were purchased by a diverse array of bidders (as opposed to credit purchases being concentrated in a few entities).  This diversity of participation, coupled with the strong regulatory oversight being used by state agencies and expert market monitors is an important guard against market manipulation and is yet another example of how this market looks to be strong and diverse, a good sign moving forward.

In addition to auctioning off credits that can be used for emissions obligations in 2013, California’s second auction also offered advance vintage credits that can be used for compliance starting in three years (2016).  Based on the sales volume of these credits (greater than 4.4 million sold), there continues to be moderate demand going forward for future vintage credits, another indication of the belief of the programs longevity.

A California carbon price opens the door for cleaner energy and clean air, as the State finally has an ongoing cost that can be attributed to carbon pollution. California’s next auction will occur in 3 months, though investments made now can be assured their carbon reduction value can be both calculated and counted on. As shown by today’s auction results, while much of the nation has waited to take concrete action against climate change, California’s train is out of the station and picking up steam every day.

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

Major California Refineries Logging Big Pollution Reductions Under AB 32

By Larissa Koehler and Tim O’Connor

 

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.

California’s landmark global warming law (AB 32) offers a solution, placing nearly all refineries in the state within a cap-and-trade program that started January 1st of this year. One of the most innovative features of cap and trade was putting a price on carbon, forcing refinery business models to take a long look at the long term financial costs of releasing greenhouse gases.

As a result of the program, evidence shows that petroleum refineries in California are starting to change their ways.  Recently, the California Air Resources Board (CARB) released 2011 emissions data showing that 11 of the state’s refineries logged significant reductions in their greenhouse gas (GHG) pollution, as compared to 2010. This represents over half of the refineries reporting emissions to the agency.

In addition to cutting climate pollution, many of California’s biggest and dirtiest refineries are also documenting major cuts in other pollutants.  As reported to the US EPA’s Toxics Release Inventory (TRI) database, 2011 was a banner year for reductions of many compounds that are known to be harmful to human health, with many at record low levels – clear evidence that AB 32-inspired reductions can improve public health and help mitigate the effects of climate change.

Refinery – City Reduction of GHGs in 2011 compared to 2010 Toxic Pollutants Reported in Record Low Amounts (5 or 10 year low) in 2011
Paramount – Paramount 22% (74,146 MT) Ammonia, Benzene, Toluene
Ultramar – Wilmington 4% (75,621 MT) Hydrochloric Acid
BP – Carson 1% (76,070 MT) Diethanolamine, Ethylene, Tetrachloroethylene
Valero – Benicia 2%  (95,225 MT) 1, 3 Butadiene, Ammonia, Benzene, Mercury Compounds, Methanol, Molybdenum Trioxide, Naphthalene, Propylene, Sulfuric Acid
ConocoPhillips– Rodeo 4% (137,212 MT) Ammonia, Ethylene, Lead Compounds, Polycyclic Aromatic Compounds
Chevron – Richmond 2% (167,468 MT) 1,3 Butadiene, Ammonia, Benzene
Shell Oil – Martinez 2% (185,313 MT) Cumene, Ethylbenzene, Methanol, Nickel Compounds, Sulfuric Acid
Chevron – El Segundo 7% (422,994 MT) Benzo (G,H,I) Perylene, Chromium Compounds, Ethylbenzene, Lead Compounds, Mercury Compounds, Xylene
Pollutant Commonly Referred to Health Effect from Chronic Exposure
1,3 Butadiene Cardiovascular effects, leukemia, cancer
Ammonia Skin irritant
Benzene Blood disorders, neurological disorders, cancer
Chromium Compounds Respiratory irritant
Ethylbenzene Eye, skin, and throat irritant
Ethylene Cancer, reproductive damage
Hydrochloric Acid Skin, eye, respiratory irritant
Lead Compounds Reproductive damage, neurological damage
Mercury Compounds Dizziness, nausea, and vomiting
Methanol Upper respiratory irritant, abdominal pain
Nickel Compounds Asthma
Polycyclic Aromatic Compounds Cancer
Sulfuric Acid Respiratory irritant
Toluene Respiratory irritant

What is the likely reason for the reduced GHGs at California Oil Refineries?

Evidence shows that reductions of GHGs and toxic pollutants are not a mere result of facilities suspending or cutting production through voluntary or involuntary action. Instead, evidence points to AB 32’s cap-and-trade program inspiring facilities to reduce emissions by investing in and upgrading equipment.  A prime example is Valero’s refinery in Benicia, CA, which decreased covered GHG emissions by over 95,000 metric tons while also cutting ammonia emissions by 98%, sulfuric acid by 84%, and benzene by 49%.

As reported in the Benicia Herald, this decrease was the direct result of a new flue gas scrubber put into use at the refinery in 2011.

According to Sue Fisher Jones, public affairs manager for the Benicia refinery, the Valero installation.

“…will let the refinery retire existing furnaces, allowing new, energy-efficient furnaces to operate and reduce the refinery’s greenhouse gas footprint.”

Valero demonstrates that putting a dollar figure on emissions leads industries to change, yielding pollution reductions while saving energy and fuel use.  Not only will the environment benefit from fewer emissions, human health will improve as well.

California should be proud of the progress it has achieved thus far with AB 32’s cap-and-trade program, but we shouldn’t rest on this success  Environmental integrity and human health depend on a continuing decline in emissions.  Thankfully, CARB has created a program, outlining strategies that monitor changes in pollution and adopts necessary measures to mitigate pollution if needed.

AB 32 policies that encourage petroleum refineries to cut pollution are a tremendous start to mitigating climate change.  However, in order to meet the goals of AB 32, more refineries need to incorporate energy efficient solutions.  Such steps will not only strengthen California’s economy, but will go a long way towards ensuring clean air and better health for present and future generations.

Also posted in Climate | Comments closed

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.

The Court’s decision offered unequivocal support for the legality of the offsets portion of AB 32’s cap-and-trade program, a huge shot in the arm for momentum going into the second greenhouse gas allowance auction on  February 19th.  Similarly, by finding that the state’s offset program is in alignment with AB 32, a bright green light has been given for further investment in projects aimed to reduce pollution both in California and outside our borders.

In this suit, EDF joined as an official party to assist the State of California’s defense.  Also joining in the defense was a collection of entities including The Nature Conservancy, the Climate Action Reserve and a collection of business interests. This broad spectrum of support for AB 32 shows that offset investments can deliver on multiple levels for the state.

First, offsets create new opportunities to fund upgrades and pollution reduction in sectors, including agriculture, forestry and industrial gases, that may not otherwise be covered under mandatory emissions limits.  Pollution reduction in these sectors enables a greater overall response to climate change, which means positive impacts on the climate and human health.

Second, allowing high quality offsets ensures that a diversity of cost-effective pollution reduction projects can qualify for cap-and-trade compliance.  This reduces overall program costs while maintaining the environmental integrity of the program.

As more projects and ideas develop under the AB 32 offsets program, California will be better able to transition to a low-carbon economy.  In short, the decision of the Superior Court has authorized the continuation of a program that will be an integral part of California’s climate change goals, spur investment in a clean economy, and maintain California’s position as a leader in the fight to combat climate change.

Also posted in Climate | Comments closed

California’s Carbon Market: A Potential Game-Changer in Slowing the Amazon’s Deforestation

California moved into the fast lane on the low-carbon development highway when it launched its carbon market this month. Now it has the opportunity to do even more to stop dangerous climate change while cutting the costs of controlling global warming pollution.  Recommendations from a group of experts on how Reducing Emissions from tropical Deforestation and forest Degradation (REDD+) can come into California’s market show how.

In the world of greenhouse gas emissions, tropical deforestation is huge. Accounting for about 15% of these emissions globally, deforestation emits more than all cars, trucks, buses, trains and airplanes on the planet — combined.

When California launched its cap-and-trade program Jan.1, it created the second largest carbon market in the world. With REDD+, the Golden State now has another golden opportunity to expand its global environmental leadership even further.

The REDD+ Offsets Working Group (ROW) convened by California, the Brazilian state of Acre, and the Mexican state of Chiapas, has released recommendations for how California can bring REDD+ into its carbon market.  The ROW, in accordance with California’s Global Warming Solutions Act’s (AB32) guidance, recommends that California allow states or countries that reduce their total emissions from deforestation below an historical average, while maintaining or increasing the output of commodities like cattle and soy that drive deforestation, to generate compliance credit in California.

This “jurisdictional” approach is much like what California is doing – reducing state-wide emissions below a clearly measurable historical level.

The ROW also recommends requiring states to show that they have made their own efforts to reduce deforestation, beyond any reductions that they seek credit for and ensuring that local –particularly indigenous — communities participate in policy design, have a choice about whether or not to participate in programs, and benefit directly if they do.

Tropical states such as Acre and Chiapas that are moving forward on their own to reduce deforestation know that California’s market for international offsets is very limited, and don’t expect to get paid for most of the reductions they’ve made or can make.

But they need a signal, and California’s carbon market may now hold the key to the future of the forest.

Until recently, rampant deforestation in the Amazon was a big part of the global warming problem – and a disaster for the millions of species of plants and animals and thousands of indigenous groups that live in the forests.  But when Brazil and Amazon states adopted new policies in 2005, all that began to change.

They ramped up law enforcement and started making large-scale reductions in Amazon deforestation, reducing their deforestation about 76% below the 1996 – 2005 average by 2012 (about 2.2 billion tons CO2) while increasing agricultural production and cattle herd. This came very close to the national target Brazil adopted — 80% reduction by 2020 — making it the world leader in emissions reductions.

Despite that progress – or maybe because of it – the Agriculture Caucus of the Brazilian Congress recently pushed for and won legislation weakening forest protection laws. The result? Although 2012 recorded the lowest deforestation on record, reports now say deforestation in the last five months has actually gone up in relation to 2011.

Creating demand for real, verifiable, additional REDD+ from jurisdictions that have solid social and environmental safeguards could be the sign the Amazon – and tropical jurisdictions around the world – need to know that REDD+ is real. Bringing it into California’s carbon market is an effective path to making that happen.

This blog is also cross-posted on the EDF Talks Global Climate Blog

Also posted in Climate | Comments closed