California Cap-and-Trade: Taking the Time to Get the Details Right

The California Air Resources Board (CARB) staff is holding a workshop today on additional details that were recently announced for California’s cap-and-trade program. These details on allowance allocation, reporting, verification, and other aspects of the program, and the recent announcement on the program’s timing by CARB Chairman Mary Nichols are important, since they show that California is taking the time needed to get it right.

What happens with this program is important for U.S. greenhouse gas (GHG) emission reductions – California represents one-eighth of the U.S. economy and the program will place a price on carbon for 85 percent of its emissions. In the absence of a comprehensive federal climate policy, state-level and regional actions like these will be key drivers for achieving GHG emission reductions in the U.S. in the near term. I now work in Washington D.C., but was a leader of the team that last December took the cap-and-trade program to the Air Board, which is responsible for implementing the Global Warming Solutions Act (better known as AB 32). As such, I’ve eagerly awaited these announcements and read them with great interest.

CARB has found a way to take the time needed to work out the details of the program without compromising on its environmental stringency, which speaks to the state’s commitment to do this program right.

Most of the reporting on the recent developments has focused on the delay of the first year of compliance from 2012 to 2013, even though all other aspects of the program will be initiated in 2012. An alternate view is that California has continued to move forward intelligently on a major program, with a keen recognition that it is more important to get the details right than it is to get them done quickly. CARB is foregoing 2012 as a compliance year (a year for which no emission reductions were expected in any case since the first year cap was set at the level of expected emissions), and using that year to make sure all the components of the program are tested and can be rolled out in 2012.

CARB has found a way to take the time needed to work out the details of the program without compromising on its environmental stringency, which speaks to the state’s commitment to do this program right. Their plan to take an extra year to help ensure a more robust start to the program will not make a difference to the atmosphere, since the program won’t allow any more emissions through 2020 than had been proposed last December.

Cap and trade has fallen out of favor in Washington, demonized by some of the same people who initially supported it. California has long recognized that the success or failure of AB 32 will influence attitudes towards a comprehensive federal climate program. With Chairman Nichols’ announcement and the publication of the additional detail and revisions that are the topic of Friday’s workshop, California appears to be on track to get the program up and running smoothly and to achieve the emissions reductions needed to meet the state’s goals. There’s a still a lot of work to complete, but CARB appears to be committed to getting the details right.

That is good news, as state programs like these combined with federal action under the Clean Air Act and other existing authorities can drive meaningful reductions and help the United States to achieve its target of reducing emissions 17% from 2005 levels by 2020.