Climate 411

Full compliance, declining emissions, robust auction: It’s November in California’s cap-and-trade program

By Katelyn Roedner Sutter / Published: November 21, 2018

This post was co-authored by Maureen Lackner. 

Today’s strong California-Quebec November 2018 carbon market auction results are the continuation of a month of good news about California’s landmark climate program. Cap-and-trade compliance is at 100% and emissions are falling, demonstrating that addressing climate change is an integral part of doing business in the Golden State.

November’s auction by the numbers

  • All 78,825,717 current allowances sold, clearing at $15.31, 78 cents above the $14.53 price floor and 26 cents above the August auction. This is the final auction before the floor price has its annual increase.
  • All of the 9,401,500 future vintage allowances offered sold at $15.33, 43 cents higher than in August. The current floor price of $14.53 will also increase for future allowances in the next auction.
  • An estimated $813,013,694 was raised for California’s Greenhouse Gas Reduction Fund, which will go to support climate investments across the state and further reduce greenhouse gas and local air pollution.

California’s market is strong & confidence is high

One critical data point showing the strength of this market is that the California Air Resources Board (CARB) reported 100% compliance from all entities covered by cap and trade for the three-year compliance period from 2015 to 2017. California businesses understand the program and know how to make it part of their business plan.

At the same time, greenhouse gas (GHG) emissions are falling, which is the key metric of program success. Read More »

Also posted in California / Authors: / Comments are closed

Climate scare tactics won’t work in California

By Erica Morehouse / Published: November 15, 2018

Some polluters and their allies are rolling out an old and tired playbook in Sacramento. California is ahead of schedule in curbing climate pollution and the economy is booming. Yet alarmism persists. These latest scare tactics are focused on one particular provision of the state’s cap-and-trade program: the level of the “price ceiling”. The price ceiling is an emergency provision that is intended to ensure that prices polluters have to pay per ton of pollution don’t reach above unexpectedly high levels.

The California Air Resources Board (CARB) is currently working to update the cap-and-trade program based on direction the Legislature gave in 2017 to extend it out to 2030. CARB will consider proposed amendments to the program today with passage of the amendments expected after a second consideration in January.

The future of climate action in California is optimism and transformation, not fear and anger

Those who look only at doomsday scenarios are mixing farfetched fearmongering with a dose of outrage by boiling this complex policy decision down to an oversimplified estimate of how much Californians might have to pay in the worst possible scenario in 2030. But fear and anger aren’t what California is about (whatever your political leanings). California is transforming its economy to a cleaner and more prosperous version of itself. After the great recession the economy recovered and grew, but carbon pollution did not.

Read More »

Also posted in California / Comments are closed

7 reasons avoiding double counting of emissions reductions helps countries, and the environment

By Alex Hanafi / Published: September 26, 2018

Photo credit: iStock

Meeting the Paris Agreement’s ambitious goal – to hold “the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial level” – will necessitate dramatic reductions in total emissions of greenhouse gases.

Market-based approaches that follow well-established “rules of the road” for emissions accounting and transparency have a powerful role to play in helping countries to meet their near-term commitments as efficiently as possible, and in encouraging and even accelerating the broad and ambitious long-term climate action that the Paris Agreement demands.

By affirming a role for market-based approaches in Article 6, the Agreement recognizes the realities on the ground, where emission-trading systems are already at work in over 50 jurisdictions home to nearly 2 billion people. More than half of the world’s countries have so far expressed an interest in using carbon markets to meet their pledges, including for achievement of conditional targets, in their NDCs (“nationally determined contributions”) under the Paris Agreement.

But if the Paris Agreement goals are to be met, the risk of “double counting” emissions reductions must be avoided.

That is why the Paris Agreement rulebook to be finalized this December in Poland at COP 24 should clearly and unambiguously state that any country that voluntarily chooses to transfer some of its emissions reductions must transparently “add back” a corresponding amount of emissions to its own emissions account. This is known as a “corresponding adjustment,” and it should apply to all transfers: whether the transferred reductions occur inside or outside the country’s NDC; and whether the reductions are being transferred to another country or to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

A corresponding adjustment has clear environmental benefits for both participating countries and our shared climate. Here are 7 of them:

Read More »

Also posted in Aviation, Paris Agreement, United Nations / Comments are closed

Once is enough: how climate negotiators can protect the environmental integrity of the Paris Agreement by avoiding double counting

By Alex Hanafi / Published: September 4, 2018

Climate ambition is often thought of in terms of the stringency of emission reduction commitments, expressed by countries under the landmark Paris Agreement as Nationally Determined Contributions (NDCs). While the NDCs that have been pledged by countries are important, they are only the first step.

To truly assess progress in reducing global climate pollution, it is necessary to look behind country pledges to understand exactly how their emissions are counted and reported. We need consistent accounting rules and transparent reporting to ensure the world is on track.

The details of accounting and transparency may sometimes sound boring and technical. But the content of these rules is as important as countries’ headline climate targets, since the headline numbers are only as good as our ability to ensure countries are clearly reducing emissions and counting those reductions accurately.

Fortunately, these same accounting and transparency rules – if done right – can also help unlock the potential of carbon markets to drive investment and innovation up, and pollution down. Read More »

Also posted in Aviation, United Nations / Comments are closed

Western Climate Initiative: Stability reigns after Ontario exit as all current and future allowances sell

By Katelyn Roedner Sutter / Published: August 21, 2018
Golden Gate Bridge Shutterstock

Golden Gate Bridge. © CAN BALCIOGLU / Shutterstock Images.

“Stability” is the word of the day for California and Quebec’s joint August auction. All current and future allowances sold, indicating that despite last month’s abrupt de-linking with Ontario, the market can weather political turbulence and remain strong.

Auction quick takes

  • All 79,421,265 current allowances sold, clearing at USD $15.05, 52 cents above the $14.53 price floor and 40 cents higher than the May auction. The offered allowances include some that were previously unsold, but do not include any allowances from Ontario.
  • All of the 9,401,500 future vintage allowances offered sold at $14.90, 37 cents above the floor price. This is significantly higher than the volume sold at the May auction, due to a number of potential variables including the de-linking with Ontario. It also signals that there is high confidence in the California-Quebec auction past 2020 as these allowances aren’t available for use until 2021.
  • An estimated $798 million was raised for California’s Greenhouse Gas Reduction Fund, which will go to help improve habitat, clean up local air, and invest in frontline communities.
  • Quebec raised approximately $166 million USD to fund provincial climate investments.

Read More »

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International trading of emissions reductions could greatly increase global climate ambition

By Gabriela Leslie / Published: August 1, 2018

The Arc de Triomphe following the signing of the Paris Agreement. Each party set a Nationally Determined Contribution for emissions reductions.

This post was authored by Gabriela Leslie, Pedro Piris-Cabezas and Ruben Lubowski

For more information, read our factsheet, The Power of Markets to Increase Ambition.

Update: the analysis in this blog has been published in the journal World Development (open source).

Carbon pricing is steadily growing worldwide and increasingly recognized as a way to achieve emissions reductions at lower cost than with standard regulations. A recent economic analysis from Environmental Defense Fund found that these cost savings from international trading of emissions could translate into direct gains for the atmosphere – and could produce nearly double the climate ambition at the same overall cost as countries’ complying with their Paris Agreement targets without international markets.

Read More »

Also posted in News, REDD+ / Comments are closed