Like 99.9 percent of the California media, I’m not keeping all that good tabs on the implementation of AB 32′s cap-and-trade system under which companies will buy and sell their pollution rights as part of the state’s forced shift to cleaner but costlier energy. I may have written about it Sunday partly to make fun of Jerry, but that doesn’t mean I’m an expert. So what does California’s implementation look like to someone who understands the issues? It looks stalled — maybe permanently. This is from the respected SoberLook.com economics web site:
With the collapse of the CCX carbon credit trading, the only viable market based program for carbon emissions reduction has been developed at a state level in California. In conjunction with Cap and Trade, California implemented a law called California’s Low Carbon Fuel Standard (LCFS). Recently however Judge Lawrence O’Neill issued an injunction to stop LCFS from proceeding as planned.
The sticking point seems to be the discriminatory nature of the program against power generated outside the state that is viewed as hampering interstate commerce. This is why such programs are difficult to implement at the state level vs. nationally.
Judge O’Neill: “California is attempting to stop leakage of GHG emissions by treating electricity generated outside of the state differently than electricity generated inside its border. This discriminates against interstate commerce.”
Legal experts now believe that this injunction will also derail California’s Cap and Trade program.
Marten Law: With respect to electricity, the cap-and-trade program imposes requirements on emissions of fossil fuel-based generation in California, requiring an allowance to be submitted for each ton of regulated GHG emissions in California. In order to avoid leakage of emissions to other states, California has imposed an allowance requirement on imported electricity representing the emissions of GHGs imputed to such electricity.
California Air Resources Board who sponsored these initiatives will appeal the LCFS injunction, but for now the whole program has been put on hold.
My impression had been there were setbacks, but nothing big. This makes it seem like there are fundamental problems with one state trying to set up the sort of energy policy that should be developed at the federal level and, as a result, coming up with something that violates interstate commerce laws.
Hat tip to the awesome MarginalRevolution.com site.