Cap And Trade california leads u.s. on cap & trade legislation

Published on October 22nd, 2011 | by Zachary Shahan


California’s Cap-and-Trade Program Finally Approved

October 22nd, 2011 by  

california leads u.s. on cap & trade legislation

QUICK NEWS: If you haven’t heard yet, California’s cap-and-trade program is finally fully, fully approved. Here’s the quick summary from the LATimes:

The California Air Resources Board on Thursday unanimously adopted the nation’s first state-administered cap-and-trade regulations, a landmark set of air pollution controls to address climate change and help the state achieve its ambitious goals to reduce greenhouse gas emissions.

The complex market system for the first time puts a price on heat-trapping pollution by allowing California’s dirtiest industries to trade carbon credits. The rules have been years in the making, overcoming legal challenges and an aggressive oil industry-sponsored ballot initiative….

Cap-and-trade is the centerpiece of AB 32, California’s historic climate change law that mandates a reduction in carbon pollution to 1990 levels by 2020. Beginning in 2013 the state’s largest carbon emitters will be required to meet the caps or buy credits if they cannot.

A second phase of compliance begins in 2015 and is expected to include 85% of California’s emissions sources.

More on the LATimesCalifornia becomes first state to adopt cap-and-trade program

Of course, I think this is a wonderful thing and look forward to California’s success leading the way for other states and the U.S. as a whole to one day adopt such a program (or some system for putting a price on CO2 and other harmful greenhouse gas emissions). As utility company CEOs (and many others) have made more than clear, a price on CO2 is critical to us addressing the causes of global warming (which are clearly human-caused) and propelling ourselves and the world into a clean energy economy much, much faster.

Kudos to California!

Photo Credit: AttributionNoncommercial Some rights reserved by Brian Wilkins

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • Mackenzie198919

    This is the dumbest thing ever, California is not what it used to be, next wel be charged for the air we breath!!!!

    • Actually, you are charged for the air you breathe — in health costs. This should help out to reduce that cost. Thankfulness is a virtue.

  • Tom Garven

    My last post on this story.

    I prefer a Carbon Tax instead of a Cap & Trade [C-T] program. I prefer the Carbon Tax for it’s simplicity and ability to monitor the financial aspects of the program. Please go to the below website to view the 6 reasons I prefer the Carbon Tax.

    carbontax[DOT]org/issues/carbon-taxes-vs-cap-and-trade/ Change “DOT” to a .

    HOWEVER, regardless of which program is used [C-T or Carbon Tax] the end RESULT should be what we all are hoping for.

    I didn’t look at the CA C-T program until YESTERDAY so please understand I am certainly no expert in the CA C-T legislation. I did however work for many of the individuals who have spear headed the CA C-T program effort before I retired some 12 years ago. What I HAVE learned by reviewing just a few of the CA program documents is that the C-T program appears to be quite complex. The following list was just cut and paste from one of the CA C-T program documents.

    1. California Cap-and-Trade Program Linked to Western Climate Initiative Partner
    2. California Light-Duty Vehicle Greenhouse Gas Standards
    3. Energy Efficiency
    4. Renewables Portfolio Standard
    5. Low Carbon Fuel Standard
    6. Regional Transportation-Related Greenhouse Gas Targets
    7. Vehicle Efficiency Measures
    8. Goods Movement
    9. Million Solar Roofs Program
    10. Medium/Heavy-Duty Vehicles
    11. Industrial Emissions
    12. High Speed Rail
    13. Green Building Strategy
    14. High Global Warming Potential Gases
    15. Recycling and Waste
    16. Sustainable Forests
    17. Water
    18. Agriculture

    As you can see from the list, the CA C-T plan touches almost every aspect of almost everyone life. It’s not just about coal plants, refineries or cement plants. It covers almost everything the people of CA touch everyday. Maybe that is one of the reasons it took so long to get this approved; but again I haven’t researched that aspect and don’t intend to.

    As an engineer by profession, I usually look for and provided specific solutions for specific problems. CA already has an air resources board which has had a positive impact on air pollution. CA also has other agencies that have done a very good job of ensuring the people of the state have clean water and still more agencies that probably control coal/coke or cement plant production particulates.

    C-T or a Carbon Tax – it doesn’t make much difference to me; they are all structured to do about the same thing. That same thing to me means; getting us off dirty fuels and creating a more healthy environment to raise our kids and grand-kids. Its not that I don’t want clean air and water and a better environment I certainly do. I just want us to take the least costly and most effective approach. And since this law was just recently passed, I don’t have the foggiest idea which of the two strategies will work best for California.

    Iin closing; some people will always believe that Cap and Trade is the best approach and some individuals like myself will believe that a Carbon Tax is a more cost effective and direct approach. Putting it quite simply – its like the difference between white cake and chocolate cake. They are different and unique but they both taste good. There really is no right or wrong way in either approach. They are just different ways of achieving the same goal.

    Tom Garven
    Lake Havasu City, AZ. USA

    • Anonymous

      I’m with you, Tom. I want us to make progress on cutting CO2 and other greenhouse gases.

      I don’t know if a carbon tax would work better than a cap and trade program. I can see how C&T might do a better job of steering the money toward effective reduction projects, but that’s a “might”.

      On reflection it seems like a carbon tax would also require a number of inspectors and ‘tax collectors’ to make that approach work. It’s not clear that there would be labor saved by going to the tax route.

      Overall, I’m glad to see something happen even if it might not be the very best approach. I’m not one to let perfect get in the way of good enough.

    • Anonymous

      I prefer a carbon tax, too.

      Wish that were more popular in political circles.

      But i def prefer C&T over nothing, by far.

      A price on CO2 is what’s most critical.

      And using that money generated for clean energy & energy efficiency.

  • Good job California. I think this will help. At the very least it’s an important proof of concept.

  • Tom Garven

    Zack and/or Bob: Please go here for an overview of coal power production inside and outside of CA.,-111.577148&spn=6.120544,9.338379&z=6&source=embed

    How many coal fired plants used for electricity generation did you find in CA.?

    Please go here for a description of the CA C&T program in part.

    Go here for a further 152 page look at the plan and analysis and some of the agencies involved.

    I don’t have a count on the number of NEW Government agencies that are being created but I bet between the advisory committees, boards, community and state agencies its a bunch. For every dollar spent on or by those agencies, that is one less dollar spent on renewable energy.

    Got to run guys – will check back tomorrow.
    Tom G.

    • Anonymous

      Well, I don’t think any of this proves C&T won’t create more green jobs than not having it would create. Or more clean energy. The C&T program in the NE has been extremely successful in those arenas. And a price on pollution is going to drive a lot more improvement here than just about anything else could.

    • Anonymous
    • Anonymous

      Your map shows no CA coal plants. Source Watch lists eight plants as of Jan ’10.

      Obviously C&T on coal plants is not going to be a big deal in CA. From reading the LA paper piece it sounds like refineries might be the bigger issue. And they certainly aren’t going to move out of state. Oregon or Washington are not likely to host them ‘dirty’ and nowhere else along the west coast has port facilities.

      As for a few people getting hired to oversee/operate this program. Fine. More people working.

      Would the money spent on their salaries have gone to renewable energy? I doubt it.

      No one expects the transition from fossil fuels to renewables to be cost free. But when you consider the billion dollars we spend every day to support burning coal and the billion dollars we spend every day for imported oil can you not see moving to renewables a great, wonderful investment that will quickly repay itself and provide us benefits far into the future?

      Getting off of fossil fuel makes such incredible economic sense it crazy that we are not spending a billion dollars a day getting renewables up and running. Get rid of oil and gas and we have a much more affordable future.

  • Tom Garven

    I believe that renewable energy is the solution to our energy needs. Wind, solar, bio-fuels, geothermal, hydro, wave, etc are all good stuff. I do NOT however support Cap and Trade since it is ripe with ways for not only the government, but also individuals to ripe off the system. Mark my words – in a short period of time we will be hearing about how some agency or individual is getting rich off of defrauding the system. Remember this:

    1. Cap and trade does not create wealth or help the American people in any way. In fact it robs the people of needed funds by increasing the cost of energy at a time when we should be doing exactly the opposite.
    2. Cap and trade is perceived by the public as just another tax to help create a bigger government or to line the pockets of a few individuals or corporations.
    3. Cap and trade does nothing to create a larger workforce who pay taxes but does the exactly the opposite by removing needed capital from the private investment sector, and finally;

    Cap and trade is not a product – you can’t eat it, the public can’t spend or save it, you can’t drive it or plant it in the ground and watch it grow.

    I would much prefer a Carbon Tax or maybe even a Feed in Tariff [FIT]. At least with a carbon tax individuals can monitor how much money is being skimmed off at each level. A FIT would provide INCENTIVES for desirable actions instead of PUNISHING people for using carbon products.

    Sorry everyone but on this issue, I must part ways with individuals who believe that Cap and Trade is the best solution for America. About 82$% of the American people no longer trust their members of Congress to do the right thing. There is just too much temptation for abuse in the Cap and Trade system. A Carbon Tax – yes. Clean Air and Water – yes. More renewables – yes.

    • Anonymous

      Tom, cap and trade worked very well for the nation-wide acid rain program and for the regional NOx program.

      I’m sure some will try to game the system and, like just about any other piece of legislation, it will take some nailing tin over the rat holes as the greedy sniff them out.

      Cap and trade that takes coal generation off the grid will be a money saver for taxpayers. We pay a lot of money in government spending and in personal health insurance premiums to deal with the health and environmental costs caused by burning coal.

      Cap and trade is a type of tax. But it’s one that creates new activity rather than simply flowing money to the government. Coal burners who find it too expensive to upgrade their plants are going to spend money (pay a tax) to get someone else to create a carbon sink or in some fashion eliminate an equal amount of carbon.

      I totally agree with you re: the distrust of Congress. Never before have we see our elected officials from one party intentionally harm the US in an attempt to limit a sitting president to one term. What Republicans are doing to keep people unemployed is reprehensible. We could have put 400,000 Americans to work while costing the very rich only pocket change.

      That is so wrong.

      • Tom Garven

        Bob – couldn’t agree more – the acid rain program has worked well. I can’t remember for sure but aren’t some [1 or 2?] states now considering dropping out of the program because further reductions are going to be very difficult to achieve? Please correct me if I am wrong – can’t remember, maybe New Jersey was one of the states? I also agree that the more coal we get off the grid the better off we will be.

        I only dislike the METHOD we have chosen to get coal off the grid. Cap and Trade for California [CA] to me is a negative inducement. To my knowledge there are only maybe a few [maybe only 2-4] coal fired electric generating plants left in CA.

        Now that Cap and Trade has been implemented ALL of the people who live in CA are going to have to pay for the carbon coming from those coal plants. Not only that, since Arizona [AZ] provides coal generation to CA; does that mean AZ will be receiving some of the CA tax dollars to spend on renewable energy? I don’t think so. How about the solar plants being built in AZ feeding power to the CA grid? Who gets the money for those plants? How about the generation coming from Canada, Washington and Oregon; how does that fit into the mix? Cap and Trade is a flawed strategy at the single State level. Regional programs with specific goals maybe have worked.

        The people who live in San Diego county have spent 100’s of millions on greener sources of power [nuclear & solar] and are now going to have to pay the same as someone living North of San Francisco who gets power from a nearby coal.plant. Is that fair? When or IF those plants are shutdown does that mean that Cap and Trade will disappear – don’t think so. Why should we punish EVERYONE for the use of coal when some people live [almost] carbon free? It also appears to me to punish individuals who have spend 10’s of thousands making their homes more energy efficient and less carbon intensive. They are now going to be punished by paying the same RATE as everyone else.

        In my opinion, we should have the courage and leadership to START the discussions of what might work best for America however I don’t expect to see that happening anytime soon. Just because it has worked in some other country or region does not mean it is the best bet fit for American or even the State of CA. We are a very large and diverse nation.

        I could support a NATIONAL incremental tax on coal and selected chemicals, but it would have to be part of a long term energy solution. Just taxing coal or carbon is only part of the solution.

        Tom G.

        • Anonymous

          I don’t yet know enough about the details of CA’s cap and trade to have formed an opinion on the specifics, so let me address only the larger issues.

          First, I don’t see a difference between cap and trade and a carbon tax on rate payers. Both would raise the cost of electricity coming from a coal-burning plant. I do see a possible benefit from the C&T in that the funds will go directly to mitigating atmospheric carbon. Collected taxes would possibly go into general tax funds and be spent for non-environmental purposes. A purposed tax could mitigate this problem. But either way, the cost of coal-generated electricity rises and that makes renewables competitive sooner.

          What might happen is that XYZ Utility Co. might offset the CO2 from their coal plant by building a wind or solar farm. It would force them to transition to clean energy faster than they otherwise might. That wouldn’t be a bad thing.

          Now for the unevenness of how the C&P will play out, I don’t understand that. If one utility company has eliminated the coal from its energy mix how will the placement of C&P on a coal burner selling power into another utility company effect them? If PG&E’s costs go up a bit because they get some power from a coal plant how will that change the rate of someone who buys their power from SDG&E?

          (BTW, I’m not sure PG&E gets any power from an in-state coal burner. There are a couple of small cogen plants in the Stockton area which might sell to PG&E or to SMUD. Do you know if C&T will apply to power purchased from outside the state?)

          Finally, I don’t understand how out of state renewable plays any role in all this. Solar, wind and geothermal do not release CO2. Why would they be part of the discussion?

          Well, really finally, I do agree that it would be best if we had a national or world-wide program to eliminate carbon but that just isn’t going to happen right now. CA is going to lead the way for the other 49 states just like we’ve pushed car gas mileage. We’ll almost certainly make mistakes but they should be fixable and by the time the other states evolve to the point where they are ready to do their fair share we will have furnished them with a route forward.

          • Anonymous

            Yes, I’m completely perplexed how people in a region powered with clean energy would be hurt by C&T. If anything, they might benefit from dirty energy regions needing to buy offsets from their region..

          • Tom Garven

            O.K. Zack and Bob I will just take a wait and see attitude.

          • Anonymous

            Watch carefully and report back what you discover. I’m really interested to see if there are problems with the system. Our local state rep has good ears and I’ll make him aware of things that might need tweaked.

          • Anonymous

            i would note, however, that it’s quite clear electricity prices are going to go up across the country due to many old plants needing to be retired and many improvements to the grid being needed. for more, check out this discussion of utility company CEOs (or summary point #5)


          • Anonymous

            Build wind farms faster. Wind on the grid pulls prices down.

            And I’ll bet that in sunny places solar is starting to drop the cost of power. Large array solar is now around $0.15/kWh and the price of power from gas peakers is much higher at times.

            If merit order pricing is in effect the high cost of peaker power pulls the price of all the rest of the supply up to its level. I’ve seen peaker prices well over $1/kWh. Having adequate solar on line would cap that rate at 15 cents.

  • Anonymous

    WOW, a ton of people who seem to have absolutely no understanding of how C&T works and how it will actually HELP the country have flooded our comments.

    Bots? Spammers? Concerned people who just really have no idea how this policy will affect them?


    Guys & Gals: short an simple, C&T will make polluters clean up or give money to clean companies and organizations. You will not be hurt unless you, perhaps, happen to work for a dirty energy company that can’t or won’t transition to a clean energy economy and you also are like that company.

    The health savings from the policy will save everyone money on healthcare and will save them money on the fortune they might have to dish out when “natural disasters” related to climate change hit their region.

    CA overwhelmingly passed this legislation and the most recent vote was unanimous. If you think everyone is stupid, either you are a genius and should just be happy with yourself in that realization or perhaps you should take a look at the evidence (have you done that?).

  • Bonnieclydee

    Everyone born after 1990 watch out! Since this is “law that mandates a reduction in carbon pollution to 1990 levels by 2020” you have only 9 years left to polute the planet with CO2!

    • Cldia654

      or you have 9 years before you start getting taxed for polluting beyond the 1990 levels.

  • Anetaca123

    Next step for California: taxing everyone for breathing and polluting the air with CO2. Especially athletes and construction workers who pollute well above average.

    • Rebecad838

      Don’t forget the vegetarians and vegans: they must be taxed extra for not contributing to the reduction of co2 producing organisms. Shame on them!

      • Bonnieclydee

        Hunters in cal should get carbon credits!

  • Ttyeey

    Way to lead a way to complete failure!

    • Brycesee

      Too late for that. cal already succeeded in that.

  • Asdfasdf

    seems like *only* morons live in that failed state.

    • Batley_who

      Not only morons, also big fat cats making big $$$ on this deal…

      • Anetaca123

        Also h-wood clowns live in ca poluting the air with co2.

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