Selected category: Emissions trading & markets

Who should pay for pollution?

Recent study by American Lung Association finds that 80% of Californians are still at risk from unhealthy air. Opponents to clean air claim the "right" to pollute in ongoing litigation.
Image Source: Flickr, San Bernardino Valley, 2009

It’s pretty clear we have to limit pollution. This week the American Lung Association released their “State of the Air Report” finding that 80% of Californians are still at risk from unhealthy air, despite decades of effort and significant progress. Climate-destabilizing air pollution is harming our state in countless ways, from the Sierra to the Central Valley to the coastline. Given the high cost of pollution, who should pay and take responsibility when it occurs? Should the responsibility primarily be with polluting companies, or should the costs be borne by society at large?

California has been regulating conventional air pollutants for decades, but has only recently started regulating climate pollutants that not only warm our planet but also worsen and are otherwise directly linked to sources of local air pollution.

Many businesses in California are good corporate citizens on this issue. They accept that pollution imposes a cost on society. They even appreciate the flexible, cost-effective approach California regulators have adopted of capping carbon pollution and allowing regulated businesses to trade “allowances,” so pollution can be reduced in the least expensive way possible.

This support is most often demonstrated quietly, through actions like consistently meeting obligations under the cap-and-trade program, engaging constructively at workshops to strengthen the program, and most importantly by not obstructing progress in the courts and the halls of government.

Groups seeking free allowances or to avoid regulation altogether have spent millions on campaigns and lobbying.

But others, like those represented by the California Chamber of Commerce and the Pacific Legal Foundation, are delaying efforts to clean up our air — seemingly arguing that they have a right to pollute for free. They are challenging California’s practice of auctioning some carbon allowances and using the revenue to further reduce carbon pollution.

This litigation has been dragging on for years, ever since the CalChamber filed its suit on the eve of the first cap-and-trade auction in 2012. The Pacific Legal Foundation didn’t file until the next spring. Both lawsuits were filed too late to stop the auctions from taking place, but were just in time to insert doubt and opponent’s views about their right to pollute for free into California’s historic effort to regulate carbon pollution. Back in 2013, a trial court rejected claims that auctions were illegal. But these challengers were not dissuaded, they appealed and the case is still pending.

Failing so far in court, those seeking to pollute for free are attempting to take their case to the court of public opinion after the appellate court asked for supplemental briefing in the case. The appellate court has asked both parties to answer several questions. While the court is giving careful attention to this important issue, opponents are cynically using op-eds and other media stories to plead their case for why polluting should be free.

Groups seeking free allowances or to avoid regulation altogether have spent millions on campaigns and lobbying. The California Legislature is likely the ultimate audience for this effort. Bills to provide free allowances or exempt some polluters have been proposed before but have never gotten any traction.

California has been successfully regulating harmful climate pollutants for over three years now. And holding polluters accountable for some of the cost that society bears is an integral part of the state’s strategy. Hopefully legislators will continue to see this current round of rhetoric for the self-serving ploy that it is.

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California’s Climate Leadership Can Help Save Tropical Forests

Source: Environmental Defense Fund, Steve Schwartzman

Source: Environmental Defense Fund, Steve Schwartzman

Back in 2006, when California was passing the Global Warming Solutions Act (AB32), some in industry pushed back hard, claiming that California couldn’t stop climate change by itself and that all AB32 would do was compromise the competitiveness of the state’s economy. California has proved the naysayers wrong – its economy is booming, and emissions are falling. Far from going at it alone, the Golden State is increasingly leading a global trend.

Now, California has an opportunity to build on its international leadership. By setting the gold standard for carbon market credit for international sectoral offsets – the subject of the California Air Resources Board’s (CARB) upcoming workshops – it can send a powerful signal to communities and governments that are fighting to stop tropical deforestation: carbon markets will help support their struggle.

California’s climate change program has prompted a plethora of bottom up climate action programs around the world, some of which are already achieving large-scale emissions reductions. Last December in Paris, California hosted a meeting of the “Under 2 MOU”, a group of 127 sub-national jurisdictions started by California and Baden-Wurttenburg in Germany, accounting for over a quarter of the global economy that have committed to reducing emissions below 2Mt per capita or 80% – 95% by 2050. Since the national commitments made at the Paris UN climate conference represent about half of what the science tells us is needed to keep warming below the critical threshold of 2°C, the Under 2 MOU could contribute significantly to closing the gap.

California has an opportunity to build on its international leadership by setting the gold standard for carbon market credit for international sectoral offsets.

California was also a founder of the Governor’s Climate and Forest Task Force (GCF), with Amazonian states and Indonesian provinces, in 2008. The GCF now includes 29 states and provinces from four continents, covering over a quarter of the world’s remaining tropical forests and collaborates on low-carbon rural development and creating incentives for reducing emissions from tropical deforestation and forest degradation – and GCF members have become global leaders in reducing CO₂ emissions.

Between 2006 and 2013, the states of the Brazilian Amazon, supported by national policy, reduced Amazon deforestation about 75% below the 1996 – 2005 annual average, reducing emissions by about 4.2 billion tons of CO₂ — far more than any other country or region in the world — while simultaneously increasing agricultural output and improving social indicators. Regional leader, Acre, is developing a market-based system to reward landowners and forest communities financially for conserving forest, and dedicated 70% of the proceeds of the first international transaction for forest carbon credits to indigenous and forest communities.  Overall,  reduced deforestation resulted from both state and federal policy, law enforcement, and signals from major consumer goods companies that deforestation-based soy and beef would be denied market access. California and the GCF’s work on carbon market credit for reducing deforestation gave communities and producers the prospect of economic incentives – for the first time – for protecting rather than destroying forests.

Around the world, some 50 states and countries are moving ahead with either cap-and-trade emissions reductions regime or carbon taxes – most of which began well before the Paris Agreement and President Obama’s Clean Power Plan. Meanwhile, 188 nations have made reduction commitments  covering about 90% of global emissions through the UN Paris Agreement. Increasingly countries and states are recognizing – as California and the Amazon have demonstrated – that they can stop Greenhouse Gas pollution and grow their economies at the same time, and that learning how will make them more competitive and prosperous in a carbon-constrained global economy. California, Acre, and other GCF members’ innovative development of international sector-based credits will ultimately give all of these  carbon pricing  initiatives more options and make them stronger.

Moving ahead with allowing international sector-based offsets into California’s carbon market will take the process to the next level, signaling to tropical jurisdictions globally currently responsible for more Greenhouse Gas pollution than all the cars and trucks in the world that living forests can become worth as much as dead ones.

Also posted in Deforestation, Forestry, REDD+| Leave a comment

Solving the “Paris equation”: The role of carbon markets in meeting the Paris Agreement’s ambitious goals

Source: UN,

Source: Flickr, UN Photo/Mark Garten

As nations around the world consider the results of the historic climate agreement reached at the 21st annual climate talks in Paris last December, one thing is clear: the Paris Agreement is contributing to – and a sign of – growing momentum around the world to address climate change. For the first time in history, nearly all the countries of the world have put forward concrete pledges to cut pollution and address the impacts of climate change on local communities.

Two significant outcomes of the Paris Agreement reflect that momentum:

  1. A more ambitious global goal, in which nations agreed to hold warming to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, and “pursue efforts” to limit warming to no more than 1.5 degrees Celsius (2.7 degrees Fahrenheit).
  2. A requirement that nations come back to the table every five years to strengthen their individual pledges, in order to achieve their collective goal over time.

While the pathway necessary to limit warming to 2.7 or even 3.6 degrees Fahrenheit is not specified by the Paris Agreement, nations did agree that they would achieve a “balance” between anthropogenic (i.e., human-caused) emissions of greenhouse gases (GHGs) and anthropogenic removals by so-called carbon sinks, such as via reforestation or afforestation, “in the second half of this century.” That translates to the following simple equation, which nations agreed to solve no later than 2100:

(anthropogenic emissions of GHGs) – (anthropogenic removal of GHGs by forests and other sinks) = 0

Notably, nations also provided several market- and transparency-related tools that could help solve this “Paris equation”:

  • Provisions that facilitate high-integrity, “bottom-up” linkages of domestic carbon markets to cut carbon pollution. These linkages (described in the Agreement as “cooperative approaches”) promise to reduce costs, and unlock the finance needed to drive deeper global emissions reductions;
  • A new, centralized market mechanism, governed by the UN Framework Convention on Climate Change (UNFCCC), to reduce GHG emissions and contribute to sustainable development; and
  • An enhanced transparency framework, requiring regular reporting and review of all nations’ climate efforts.

These three elements of the Paris Agreement reflect the widespread recognition among nations that carbon markets accompanied by a clear, comprehensive transparency framework will help drive the deep emissions reductions called for by science.

 

What the Paris Agreement means for carbon markets

By affirming a role for carbon markets in international climate cooperation, the Paris Agreement recognizes the realities already on the ground, where emission trading systems are at work in over 50 jurisdictions home to nearly 1 billion people. When China adopts a national carbon trading system, beginning in 2017, that number will rise to 2 billion – almost a third of the world’s population.

Figure 1:  Existing, Emerging, and Potential Carbon Pricing Jurisdictions

And more than half of the world’s countries are using, or plan to use, carbon markets to stimulate the innovation and investment needed to meet their Paris climate pledges.

With the UN now blessing the growing use of bottom-up cooperation between jurisdictions to link their markets and spur greater efficiency, as California and Quebec have done, the challenge now becomes how to accelerate the transparent, high-integrity international cooperation needed to solve the Paris equation.  That cooperation – needed both inside and outside the UNFCCC – is the subject of my next post.

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6 successes from California and Quebec’s third year of cap and trade

Source: Flickr

Photo Source: Flickr / JoeBehr

The joint carbon market in California and Quebec holds its first carbon market allowance auction of 2016 today.

The auction offers a good opportunity to reflect on some of the notable successes of the market in 2015.

The California-Quebec market is one of the prime examples of a successful carbon market that many countries will look to as they consider how to meet the commitments made in Paris, where countries successfully negotiated an ambitious climate deal that outlines multiple pathways for nations to use markets to meet their long-term goals.

Here are the top six successes of California and Quebec’s carbon market in 2015, in no particular order. Read More »

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Report back from Paris: What the new climate deal means – and where we go from here

caption

Source: Flickr/ UNClimateChange

The United Nations climate agreement in Paris, and the intense negotiations leading up to it, were a breakthrough in a number of important ways.

First of all, the agreement represents the coming of age of climate diplomacy. It was evident from the beginning that French Foreign Minister Laurent Fabius, who chaired the talks, had the full trust and confidence of the room.

He artfully identified a zone of agreement among 196 delegations that gave nearly everyone something they wanted without crossing red lines.

The agreement was also the culmination of months of bilateral diplomacy at the highest levels, most visibly between the U.S. and China. The direct involvement of President Obama and other world leaders was critical to success – and shows a strategic savvy and leader-level involvement that we haven’t seen in past climate talks.

But it’s the language of the agreement itself, and the broad backing it received, that makes it such a big deal. It means that we now have a chance – not a guarantee, but a chance – to put the world on a healthier path.

Read More »

Also posted in Deforestation, News, Paris, REDD+, UN negotiations| Leave a comment

How carbon markets are driving deeper, faster pollution cuts in Paris climate pledges

Among the 170+ countries that have submitted their carbon-cutting plans — known as Intended Nationally Determined Contributions, or “INDCs” — more than half have either stated their intention to use international carbon markets to tackle carbon pollution, or are already employing them domestically. Image source: cropped INDC map from IETA's INDC Tracker

With only a few days before nations meet in Paris to negotiate an inclusive post-2020 structure for global climate cooperation under the UN Framework Convention on Climate Change (UNFCCC), we already know that the world will be entering a new paradigm of climate action, in which all nations play a role in the collective fight against climate change.

We also know that while the emissions reductions pledged for 2025 or 2030 by over 170 countries over the course of this year are significant, aggressive additional action well beyond 2030 will be necessary to meet the internationally agreed goal of limiting global average atmospheric warming to no more than 2 degrees Celsius, or 3.6 degrees Fahrenheit. That goal is the upper limit agreed by the international community, at a level that scientists believe would likely avoid the worst impacts of climate change.

Because the Paris pledges mark only the beginning of a new era of climate cooperation, it is imperative that an effective international climate agreement promotes greater and greater ambition as it matures. A successful Paris agreement can thus set the stage for the world to turn the corner on global emissions.

Even before they arrive in Paris, countries have started identifying effective tools that can be used to accelerate ambition over time, so that the UNFCCC’s objective – to “prevent dangerous anthropogenic interference with the climate system” – can be met.

Read More »

Also posted in Paris, UN negotiations| Leave a comment
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