California's Cap-and-Trade Program is Alive and Well

This is the eighth installment in a series of posts on California's climate leadership. These posts address a wide range of related topics including economic benefits and renewable energy.

With unprecedented bipartisan support, California lawmakers have voted to extend the state's cap-and-trade program. This carbon pricing program is key to meeting California's ambitious carbon reduction targets. The plan puts a statewide cap on greenhouse gas emissions and allows companies to buy and sell pollution credits.

Agreement on a Pan-Canadian Carbon Pricing Scheme

It looks as though Prime Minister Justin Trudeau's Liberals are moving forward with a national carbon pricing scheme albeit adapted to regional circumstances. On Thursday March 3, 2016, Trudeau announced that the federal government along with all ten provinces have agreed to a "comprehensive and ambitious plan" to put a price on carbon.

Carbon pricing (which includes both cap and trade and a carbon tax) leverages the market to disincentivize emissions intensive activities by making them more expensive while incentivizing low carbon technologies. In effect carbon pricing integrates the true cost of carbon which is currently not reflected in the market. Carbon pricing is the best way to help governments reduce emissions while minimizing economic impacts.

Market Based Approaches to Combating Climate Change

Sustainability has woven its way into market mechanisms and it is changing business models. Almost a dozen stock exchanges around the world now require sustainability risk disclosure from listed companies and around 7,000 companies now produce annual sustainability reports through GRI. Carbon pricing, the long awaited holy grail of market based change is slowly becoming a global reality.  Both to capitalize on opportunities and to mitigate against risk, sustainability is now a strategic imperative that no business can afford to ignore.

The Merits of Carbon Pricing in B.C.

Although the ruling Conservative federal government has fought any mention of a national carbon tax, individual provinces like British Columbia (B.C.) are moving forward with their own initiatives.

B.C. enacted a carbon tax in 2008 that covers about 70 percent of fossil-fuel consumption. B.C.’s carbon tax is currently pegged at $30 a ton. It has helped the province’s per-capita emissions decline almost 10 percent from 2008 to 2010. B.C.'s carbon tax has also played an instrumental role in convincing the US states to embrace carbon pricing. B.C. forged an agreement with Washington, Oregon and California to create the Pacific Coast Action Plan on Climate and Energy. Their plan is to prioritize clean energy and innovation through a strong economic incentive provided by a carbon tax or form thereof. These jurisdictions collectively represent 53 million people, and an economic region with a combined GDP of $2.8-trillion — making it the world's fifth-largest economy.

Webinar - California Cap and Trade Program: Everything Businesses Need to Know

The one hour complimentary webinar on California's Cap and Trade Program will take place on Wednesday, June 4, 2014 at 2pm EDT. It will provide an in-depth look at how California's carbon market works and show you what you need to know to craft a cogent compliance strategy.

As part of California’s Assembly Bill 32, the California cap-and-trade program seeks to reduce greenhouse gas emissions to 1990 levels. By placing a hard cap on emissions and setting up a market based mechanism, California has placed a price on carbon emissions covered by the program.

Companies covered by the cap-and-trade program must purchase California Carbon Allowances (CCAs) to cover their emissions of carbon dioxide equivalent (CO2e). Companies can also use offset credits as a lower cost alternative to CCAs for compliance.

Video - Why a Carbon Tax May be the Best Way to Reduce CO2

In this video Judd Legam, editor of ThinkProgress explains how a carbon tax works. This effort is of great importance in light of the current concentration of carbon dioxide in the earth's atmosphere which now exceeds 400 parts per million which is causing big changes in global temperatures, which means big changes in climate: more droughts, more wildfires, more extreme weather, more crop failure, and all of the other effects of global warming. According to Legam, the simplest solution is a carbon tax.

RGGI States' Third Consecutive Year of GHG Declines

For the third consecutive year greenhouse gas emissions have fallen in the US states that are part of the Regional Greenhouse Gas Initiative (RGGI). These nine states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) recorded a six percent decline in greenhouse gas emissions in 2013.

All I Want for Christmas is a Price on Carbon

As 2013 winds down, there are promising signs that we may actually see a price on carbon in the U.S. In 2010, the cap-and-trade bill was killed in the Senate by the fossil fuel industry’s ubiquitous misinformation campaigns. However, a confluence of events have renewed hopes that we may yet see carbon pricing legislation that could significantly reduce U.S. carbon emissions.

Why we need a carbon tax

Paying for carbon pollution is the best way to put free markets to work to reign in global warming causing emissions. There is a virtual consensus among economists who say that putting a price on carbon is the most effective way to fight global warming. The case for carbon pricing is strong, this point has been repeatedly made by the World Bank and a number of economists including a team from the London School of Economics.

24 Hours of Reality: The Cost of Carbon Online Event

The event known as "24 Hours of Reality: The Cost of Carbon!" is an online event that is taking place on October 22 and 23. (see bottom of the page for North American showtimes). In 2012 over 16 million people around the world tuned in. This year organizers expect to break that record.

Al Gore, the founder and Chairman of the Climate Reality Project, is staging this event to help raise awareness about the fact that we are already paying for climate change.

During this year's 24 Hours of Reality, the Climate Reality Project will highlight the costs of carbon pollution from our taxes to our health care bills. The day will also address how putting a price on carbon is the best way we can deal with the climate crisis.

As explained by Gore, "We can’t keep paying for polluters’ choices. To solve the climate crisis we know we have to put a price on carbon."

California's Cap-and-Trade Leadership

On Wednesday November 14, California held its first auction to sell carbon credits. For six years that state has been working on its cap-and-trade system, more than six years in the making. Finally California has imposed a limit on the amount of carbon emissions and this limit will be reduced over time so that by 2020 the state can cut emissions by 15 percent as compared to 1990 levels. Companies that exceed their limit are forced to buy credits from projects that cut greenhouse gas emissions. Almost all of the 23.1 million credits California has distributed to utilities and big industry for 2013 compliance have been free

Cap-and-trade puts market mechanisms to work on behalf of the environment. This approach to emissions reductions is a model for the rest of the nation. It was market driven forces that caused the build-up of climate change causing greenhouse gases. It therefore stands to reason that similar market mechanism can be brought to bear to reduce emissions and curtail warming.

Scientists Want Carbon Taxes to Address Climate Change

NASA scientist Jim Hansen calls for a carbon tax as he describes climate change inaction as the moral equivalent of supporting slavery. Hansen argues that current generations are morally responsible to protect the Earth for their children and grandchildren. He is calling for a global carbon tax and sees inaction on climate change as an "injustice of one generation to others". Preceding generations may have been able to plead ignorance but we no longer have that luxury.

As reviewed in a Guardian article, Hansen's latest scientific paper, which he co-authored with 17 other experts, urgently calls for an immediate 6% annual cut in CO2 emissions, and substantial growth in global forest cover. Hansen and his colleagues warn that failing to cut CO2 emissions by 6% now will mean that by 2022, the annual cuts would need to reach a more drastic level of 15% a year.

South Korea Passes Cap-and-Trade Legislation

South Korea has passed legislation that will see the introduction of a greenhouse gas emissions trading program in which companies will buy or sell rights to emit carbon dioxide. Although the legislation had bipartisan support working out the details may be difficult.

Global Carbon Market will Grow in 2012 then Decline in 2013

As reported in Commodities Now, the carbon market will grow in 2012 and then fall in 2013. According to analysis by Thomson Reuters Point Carbon, despite depressed prices, the volume of carbon traded globally will grow by 13 percent in 2012, reaching 9.5 Gt CO2e.

The Success of RGGI Carbon Trading Shows Cap-and-Trade Works

Despite opposition from Republicans, the Regional Greenhouse Gas Initiative (RGGI) has been shown to be very successful. A January 28th New York Times article reviewed RGGI a carbon trading initiative launched by ten northeastern states in January 2009. According to independent reports the emissions reductions have been greater and cheaper than expected, and have produced substantial fringe benefits in terms of lower overall electricity costs, more jobs, and greater regional independence of fossil fuel imports.

Free Webinar: The Carbon Tax & Your Business

GreenBizCheck will be holding a free webinar on 29 November at 11 AM AEST. This webinar will help business owners gain a better understanding of the carbon tax and how it will affect their business.

California is Leading the US with a Cap-and-Trade System

California, a leader in efforts to combat climate change, has become the first US state to implement cap-and-trade to regulate greenhouse gas emissions. The system will place a price tag on carbon emissions and allow the state's industries to trade carbon credits. The system will provide financial incentives to companies in order to curb greenhouse-gas emissions. The cap-and-trade program is scheduled to start in 2013 and it aims to slash emissions to 1990 levels by 2020.

Canadians Support Efforts to Combat Climate Change

Unlike their Conservative federal leadership, Canadians support efforts on climate change. According to a joint study released in April 2011, Canadians are more likely to believe in the veracity of climate change then Americans.

The study also found Canadians are more willing than their friends to the south to pay for energy from renewable sources. A majority of Canadians said they would support a carbon tax or cap-and-trade scheme, even if it came with a cost of $50 per month in energy expenses.

A report from the Conference Board of Canada indicated that the federal, provincial and municipal levels of government spend a lot money trying to understand the implications of climate change. However, they are inefficient and there is a striking lack of coordination.

The report suggests that Canadians need a carbon pricing scheme like those in place in BC and Quebec.

© 2011, Richard Matthews. All rights reserved.

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Dan Miller on the Psychology of Climate Change and the Business of Change

In 2009, Dan Miller, managing director of the Rhoda Group, delivered a presentation called A Really Inconvenient Truth at the Hillside Club in Berkeley, California.

Miller discussed the four scenarios of action vs. inaction in the face of climate change. He came to the obvious conclusion that we must do all that we can to resist the perils of runaway climate change.

However, climate change still does not have the critical mass of support it needs to bring about major changes in the short term. We need to know why so many do not seem to understand the urgency climate change, we need to understand human psychology.

The psychology of climate change explores some interesting ways that humans identify threat. Miller explained that humans have a tendency to react to six kinds of threats, namely threats which are:

1. Visible
2. Have a precedent
3. Are confirmed in the media
4. Have a simple causality
5. Are caused by another
6. Have a direct personal consequence

The problem is that climate change (eg, CO2) is not visible, nor do we have a precedent in recorded history. The media has only confused people about climate change due in part to the fact that the causality is anything but simple. Further climate change is not caused by another, it is caused by us and we cannot see the direct personal consequences.

Growing levels of GHGs in the atmosphere increase the number of hurricanes, draughts, floods, wildfires and pandemics. Climate change will also lead to dramatic coastal flooding due to rising sea levels.

Despite the seriousness of the situation we face, Miller states, "there is a lot we can do and there is a lot we have to do." People can do little things like drive a fuel efficient vehicle, eat less beef and increase energy efficiency. People can also share the urgency of climate change with others and communicate with their elected officials about the need for legislation.

Miller indicates that to avoid runaway climate change, our political leaders need to enact the following legislation:

-Cap-and-trade or CO2 tax
-Mandatory energy efficiency standards
-Ban on new coal fired power plants
-Phase out of existing coal fired plants
-Eliminate subsidies for fossil fuels
-Give subsidies and incentives for clean energy
-Massively increase energy/climate research spending

Miller also says that we need strategies to manage extreme weather which is unavoidable even in the most optimistic scenario. Despite its unpopularity, we need to support global family planning to manage population growth.

In addition to their personal lives, individuals can exhibit greater environmental awareness in the work they do. They can encourage their partners, employers and colleagues to act with a greater awareness of their footprint.

Towards the end of his presentation, Miller suggests that the business community has a role to play in navigating the way forward to manage climate change.

Miller points out the risks associated with optimized inventory systems. He indicates that just in time inventory management will unravel in an economy ravaged by climate change. Miller suggests that rather than optimizing, businesses should be robust enabling them to adapt quickly to the loss of a supplier or distribution chain.

Miller states that even with consorted collective efforts to reduce our production of GHGs and prepare for the effects of climate change, geo-engineering (the ability to artificially control the climate) will likely prove necessary.

Although climate change is unstoppable, if we wait too long to reign it in we will not be able to prevent far more catastrophic impacts.

To see the full lecture on Fora.tv click here.

© 2011, Richard Matthews. All rights reserved.

GE’s Immelt Calls Current US Energy Policy "Stupid"

GE's CEO Jeffrey Immelt has indicated that the US needs a national energy policy that puts a long-term price on carbon pollution as China and other nations surge ahead in green technology. GE, based in Fairfield, Connecticut, is the world’s biggest maker of power-generation equipment, GE power-generation equipment provides one-third of the world’s electricity. The GE Energy Infrastructure division includes transmission equipment and smart-meters. As reported in Businesssweek, Immelt said, “China is green, green, green, green -- four greens.” He cited demand, innovation funding, supply chain and public policy as advantages for China over the US. Immelt is a leading advocate in US Climate Action Partnership, a coalition of companies backing stalled legislation that would establish a cap-and-trade. The failure to set new rules promoting “clean” technologies puts the U.S. at risk, he said. “You actually have to have an energy policy,” Immelt said. “It’s stupid what we have today.” China and other industrialized counties are pulling ahead of the US in the race to lead in clean energy because policy makers in Washington have been caught up in debates on issues such as the effects of climate change, Immelt said. “The rest of the world is moving 10 times faster than we are, and that’s going to mean someday fewer jobs, it’s going to mean less energy security, it’s going to mean lots of other things other than just climate change,” he said. Immelt, who also called for a national standard requiring the use of renewable energy, said GE won’t give up on pushing to change US energy policy. Immelt indicated that the US needs to establish a “long-term price signal” on carbon emissions, in order for companies to provide “appropriate funding for innovation.” Such moves would create jobs rather than shift them overseas, Immelt said. Related Posts Video: The Wisdom of Private Sector Investments in CleanTech GE's Investments in Green are Paying Off Growing US Corporate Investments are Driving Cleantech in 2010 US Cap-and-Trade: Obstacles and Solutions US Cap-and-Trade: Positioning Your Business

Republican Gubernatorial Gains and US Carbon Trading Programs

The Midterm gubernatorial elections of 2010 have important implications for regional market based mechanisms of greenhouse gas reductions. Although these programs spur innovation in the clean energy economy and create green jobs, some Republican governors have already indicated that they are planning to withdraw from these agreements.

The three major carbon trading programs in the US are the
Regional Greenhouse Gas Initiative (RGGI), the Western Climate Initiative (WCI) and the Midwestern Greenhouse Gas Reduction Accord (Midwestern Accord).

RGGI is a carbon trading program that involves Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont, it went into effect in 2008. There is one observer state (Pennsylvania), and four Canadian provinces are also observers (Québec, New Brunswick and Ontario).

RGGI is a successful regional initiative to reduce greenhouse gas emissions. RGGI is implementing a cap and trade system for CO2 emissions from power plants in the member states. Emission permit auctioning began in September 2008, and the first three-year compliance period began on January 1, 2009. Proceeds will be used to promote energy conservation and renewable energy. The system affects fossil fuel power plants with 25 MW or greater generating capacity. Since 2008, the program has generated more than $700 million for renewable energy and efficiency programs.

The governor races for states participating in the Regional Greenhouse Gas Initiative (RGGI) have mostly gone to the Democrats. Although the Democrats won seven of the ten states involved in RGGI program (Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New York, and Vermont), they lost Maine. New Jersey did not have a gubernatorial election this year, but the current Rebuplican governor (Chris Christie) supports RGGI.

Lincoln D. Chafee is Rhode Island's new Governor, he is a Republican turned independent and he has a long track record of environmental accomplishments. Sheila Dormody, president of the Environment Council of Rhode Island said, “we will have a good environmental leader in the new governor.”

WCI, is a regional cap-and-trade compact between California, New Mexico, Utah, Washington, Oregon, Montana, Arizona (although Arizona rescinded its partnership agreement on February 5, 2010), and four Canadian provinces (British Columbia, Manitoba, Ontario, and Quebec). WCI was established in 2007 and scheduled to go into effect in 2012.

The observers are Alaska, Colorado, Idaho, Kansas, Nevada, Wyoming, the province of Saskatchewan and the Mexican states of Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora and Tamaulipas.

WCI is an initiative to combat climate change caused by global warming, independent of their national governments. WCI is a collaboration of independent jurisdictions working together to identify, evaluate, and implement policies to tackle climate change at a regional level. This is a comprehensive effort to reduce greenhouse gas pollution, spur investment in clean-energy technologies that create green jobs and reduce dependence on imported oil.

The governor races in Western Climate Initiative states are roughly split with 3 of 5 races going to Republican governors. While California and Oregon have voted for a Democrat in the statehouse, Republicans won in New Mexico, Utah, and Arizona.

The newly elected Republican governors in Arizona and Utah have already began working to end their state's involvement with the carbon trading program.

The Midwestern Greenhouse Gas Reduction Accord (Midwestern Accord) is a regional agreement by six governors of states in the US Midwest and the Premier of one Canadian province to reduce greenhouse gas emissions to combat climate change.

Signatories to the Accord are the US states of Minnesota, Wisconsin, Illinois, Iowa, Michigan, Kansas, and the Canadian Province of Manitoba. Observers of the Accord are Indiana, Ohio, and South Dakota, as well as the Canadian Province of Ontario.

The Midwestern Accord was signed on November 15, 2007. In June 2009, the Midwestern Greenhouse Gas Reduction Accord Advisory Group finalized its draft.

The Midwestern Accord establishes greenhouse gas reduction targets and develops a market-based and multi-sector cap-and-trade mechanism to help achieve those reduction targets. It includes a system to enable tracking, management, and crediting for entities that reduce greenhouse gas emissions. The Midwest accord also develops and implements additional steps as needed to achieve the reduction targets, such as a low-carbon fuel standards, regional incentives and funding mechanisms.

In the 2010 midterms, Minnesota, went to a democratic governor, while Illinois, Iowa, Kansas, Michigan and Wisconsin all went to Republican governors.

Judging by the number of Republican governors, RGGI looks as though it will survive, while the participation of all the member states in the proposed Western Climate Initiative is in doubt. It can be expected that the Midwest Accord will suffer now that Midwestern governors are predominantly Republican.

Despite the influx of Republican governors, these trading agreements are crucial to preserve any hope of eventually implementing a federal carbon trading program.


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