Is California cap-and-trade dead? What it looks like to someone paying close attention

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.

It may be bureaucratic and idiosyncratic, but this feels like good news, which is welcome.

Hat tip to the awesome MarginalRevolution.com site.

3 thoughts on “Is California cap-and-trade dead? What it looks like to someone paying close attention

  1. And this is the thing that’s supposed to fund Jerry’s highspeed rail from nowhere to nowhere? The only thing that can make that rail better is if it’s solar powered.

  2. We’ve been at this game for a very long time. Obviously, your reports have missed one important aspect of the judge’s recent decision: the state attorney general has already filed an appeal and is asking that any enforcement of the judge’s decision be delayed until the appeal is not only heard but decided.

    Between now and then, the state’s CARB (California’s Abirtrary Rules for Bankruptcy) and its Green Czar Mary Nichols have no intention of delaying the first round of carbon credit sales – slated for August – and putting their enforcement mechanisms in place on New Years Day 2013.

    Last Monday, Gov Brown estimated the first year cash windfall from carbon credit sales will amount to 1-B dollars. That’s the minimum of the price of each credit is $10. In truth, the price could be as much as $40 per credit. If so, do the math and see what an incredible transfer of wealth this will be from the business sector to the public sector (some times known as the massive bureaucracies in Sacramento). Oh, by the way, the Governor said he intend to take most of that $1/B and — pay down the state’s deficit. No, guess again. He intends to use it to underwrite the cost of the Bullet Train to Nowhere.

    If you need more info, check out our website, listen to our podcast and help us get the word out. The only way we can delay or derail this terrible scheme is to find new ways to sue the state, sue CARB, in both federal and state courts, until the plan is dismantled piece by piece.

    By the way, your story didn’t include the other big court decision against the EPA by a 3 judge district court panel in DC that said the federal cross state pollution guidelines were similarly unconstititional.

    Let us know if we can be of more help to you as you untable the web of AB 32, the 2006 California Global Warming Solutions Act and cap and trade.

    And always – follow the money.

    Warren Duffy
    President, co founder
    CFACTSOCAL.org

  3. Pingback: Is California cap-and-trade dead? What it looks like to someone … » greennewstweets.com

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