Climate 411

Western Climate Initiative auction results show resilience of cap and trade and benefit of long-term climate investment strategy

Yosemite National Park, California. iStock.

The results of the latest joint California-Quebec cap-and-trade auction were released today. As expected, the auction was significantly undersubscribed, something not seen since February 2017. The low revenue from this auction points to a need for California to develop a diversified, long-term strategy to fund critical climate programs, even as the state works to balance many important fiscal priorities. At the same time, the resilience of the cap and trade program even during periods of instability provides a critical backstop, ensuring California’s targets for reductions in climate pollution are achieved.

Here’s a quick recap of the results:

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California’s experience with buyer liability shows how aviation can help ensure environmental integrity

https://www.flickr.com/photos/140970794@N06/30345941512

Airplane flying at sunset. Adam Clark, Flickr

The International Civil Aviation Organization is preparing to stand up its market-based emissions reduction program, the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA. As it does so, ICAO must maintain CORSIA’s environmental integrity.

To that end, airlines should not be allowed to count, for CORSIA compliance, carbon credits that have been found to be invalid, e.g., fraudulently issued or otherwise not meeting CORSIA’s standards for credit quality. To ensure that all credits represent actual emission reductions, such substandard credits should be invalidated – even if the fraud isn’t exposed until after airlines have canceled the credits in CORSIA. The emissions for which the credits had been tendered have occurred, and still need to be covered by valid reductions in order to meet CORSIA’s promise of “carbon neutral growth.”

California offers one approach to how CORSIA can do this. In its market-based climate program, California has developed a way to cover the emissions from invalidated credits to uphold the integrity of its program and encourage emitters to invest only in high-integrity offsets. It’s known as “buyer liability,” which means that if the California Air Resources Board (CARB), the regulatory body, invalidates offset credits, then those who purchased the credits for compliance with California’s emissions limit must replace the invalidated credits. This ensures that emitters meet their full compliance obligations and that they are more diligent in selecting offsets.

Early on, California’s buyer liability approach caused some uncertainty among offset project developers. But seven years of experience demonstrates that buyer liability has worked in California’s carbon market. Here’s how we know:

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Also posted in Aviation, Carbon Markets / Comments are closed

California must defend rules to protect health, especially now

This post was coauthored by Katelyn Roedner Sutter, Pablo Garza and Lauren Navarro.

A man walks his two kids along the road during San Francisco Bike & Roll to School 2018. San Francisco Bicycle Coalition via Flikr.

A public health emergency is precisely the wrong time to undermine measures meant to improve air quality, address environmental health disparities, or ensure the sustainability of our common resources. In fact, the COVID-19 public health crisis makes it more essential that California upholds its bedrock environmental and health rules, and ensures clean air and water for all.

A preliminary nationwide analysis by Harvard University shows COVID death rates are higher in counties that had higher levels of air pollution in advance of the pandemic. This underscores the vital importance of pollution protections for human health, both during and after the COVID-19 crisis.

Understanding the importance of having rules to protect California’s health, environment and natural resources, 37 California legislators, led by Assembly Member Eloise Gomez Reyes, have called on Governor Gavin Newsom to “resist efforts to roll back any current protections” and to focus on the health and environmental impacts in the state’s most vulnerable and disadvantaged communities. They know that weakening these safeguards will mean more cancer, more asthma attacks, more heart and lung problems, and more loss of life for Californians.

The following summarizes some key programs and protections that appear to be under threat, and where California should heed the call of these legislators to stand firm:

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Also posted in Cars and Pollution, Cities and states, Health / Comments are closed

California-Quebec carbon auction kicks off 2020 with record allowance price

Keywords: Perazzo Meadows, Truckee, CA, California. Natural and working lands are part of California’s climate strategy. EDF/Mathew Grimm

The results of February’s joint California-Quebec auction are in, and 2020 is off to a strong start in the Western Climate Initiative. Fewer allowances were available in this auction than in the past, which could help explain the record high settlement price.

Highs and lows of the February 2020 auction:

  • All 57,090,077 current allowances sold. Notably, this amount is over 10 million fewer allowances than what was offered at the last auction in November 2019. It is also the lowest volume of offered allowances since the very first joint auction in November 2014.
  • Current allowances cleared at $17.87, which is $1.19 above the price floor of $16.68. This is 87 cents higher than the November 2019 clearing price of $17.00 and 42 cents higher than the previous record-high price of $17.45 from the May, 2019 auction.
  • 8,672,250 future vintage allowances were offered for sale, and all of them sold as well. With over 350,000 fewer future allowances than the November 2019 auction, this was the smallest volume of future allowances ever offered.
  • The future allowances cleared at $18.00, $1.32 above the floor. These allowances cannot be used for compliance until 2023.
  • The auction raised approximately $600 million USD for the Greenhouse Gas Reduction Fund, which California will use for programs that further reduce climate and local air pollution and advance environmental equity.
  • Quebec raised over $240 million CAD (approximately $185 million USD) to support climate action in the province.

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Also posted in Carbon Markets / Comments are closed

California climate program remains solid as transportation emissions fall

Bixby Bridge, California. Photo by Dave Lastovskiy on Unsplash

Today’s solid results from the latest Western Climate Initiative cap-and-trade auction demonstrate once again the resilience of the market. Yet this is not the only interesting news out of the California market this quarter as the state released the preliminary 2018 emissions inventory, which showed that transportation emissions fell for the first time since 2012.

First up, auction results:

  • All 67,435,661 current allowances sold, clearing at $17.00, $1.38 above the floor price of $15.62. This is $.16 lower than the August 2019 clearing price of $17.16.
  • All of the 9,038,000 future vintage allowances offered also sold at $16.80, $1.18 above the $15.62 floor price. These allowances are not available for use until 2022.
  • The auction raised approximately $739 million for the Greenhouse Gas Reduction Fund, which California uses for activities that further decrease greenhouse gas emissions, improve local air quality, and support the state’s most vulnerable communities.
  • Quebec raised over approximately $245 million CAD (approximately $185 million USD) to fund their own climate priorities.

These results are generally consistent with the past several auctions, but there are a couple of points worth noting:

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Also posted in Carbon Markets / Comments are closed

As 2020 approaches, the climate action spotlight is on forests

Amazon Canopy. Warwick Lister-Kaye / istockphoto.com.

With 2020 fast approaching, countries, companies, and other stakeholders are taking stock of their climate commitments. As they consider ways to meet and enhance climate goals, interest in net zero emissions commitments and carbon removal technologies has grown. But what these discussions reveal is that forests are crucial. Capable of significantly reducing net emissions at a low marginal cost, and in the short-term, forests are an important piece of the climate change mitigation puzzle.

This year, tropical forests have dominated the spotlight. The forest fires raging throughout Brazil, Bolivia, and Indonesia are part of a disturbing trend: despite commitments from governments and companies, deforestation is still on the rise globally. Key forest ecosystems such as the Amazon continue to face the pressures of crop expansion for agricultural production, illegal extractive activities like timber harvesting and mining, relaxed legal enforcement and weakened environmental policies.

As deforestation persists, the planet’s capacity to absorb carbon pollution diminishes and more carbon is being released; tree cover loss in tropical forests accounts for about 16 to 33 percent of global emissions. We should be alarmed. But we should also be hopeful. Here are a few reasons why:

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Also posted in Carbon Markets, Forest protection, International, Paris Agreement, REDD+, United Nations / Comments are closed