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.

Obama Proposes Oil Tax and Clean Energy Infrastructure Investments

President Obama has recently proposed an oil tax and a clean energy infrastructure investment plan that would create a “more integrated, sophisticated and sustainable transportation sector." The proposal is part of a budget request that calls for annual spending of $32 billion and it will be paid for with a $10 a barrel oil tax. The ten year 320 billion is designed to finance a 21st century clean energy infrastructure in the US. This includes annual spending of $20 billion for national transportation initiatives, $10 billion in for cities and states and $2.4 billion for green vehicle research.

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.

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.