California panel reaffirms carbon trading program


The California Air Resources Board voted to reaffirm its cap-and-trade plan Wednesday, a decision that puts the nation’s first-ever state carbon trading program back on track, for now.

The on-again, off-again rules have been years in the making and are meant to complement AB 32, California’s landmark climate change law that mandates a reduction in carbon pollution to 1990 levels by 2020. The air board adopted a preliminary carbon trading plan in late 2008 but was sued by environmental justice groups in 2009.

A San Francisco judge in March ordered the air board to more comprehensively analyze alternatives to the market-based trading system, such as a carbon tax or fee. In a unanimous vote in Sacramento on Wednesday, the board adopted the revised environmental analysis while still affirming its original decision.


But the board’s vote may not forestall another legal challenge. The original plaintiffs argued in Wednesday’s hearing that the revised analysis still failed to adequately consider other options. UCLA law professor Cara Horowitz said “most assuredly” the matter would be back before the court.

Board chief Mary Nichols said she has not always supported cap and trade in part because it would be difficult to administer. “I had my doubts,” she said, adding that many details remain to be hashed out. “It is a form of California leadership that involves some risk. This is still the most viable of the alternatives to achieve the goals of AB 32.”

Originally scheduled for implementation next year, industry compliance with the cap-and-trade program will now take effect in 2013.

The state plan calls for capping greenhouse gases at more than 600 industrial plants and allowing companies to buy and sell emissions permits. It is modeled on Europe’s six-year-old cap-and-trade system. Representatives from the Canadian government and three provinces spoke during the meeting. California is considering whether to work with Canada under the Western Climate Initiative, a collaboration involving the United States, Mexico and Canada.

California’s program would be North America’s biggest carbon market, three times larger than a utility-only system in 10 northeastern states. By 2016, about $10 billion in carbon allowances are expected to be traded through the California market.

During the six-hour public meeting, groups that largely represent low-income communities argued that a cap-and-trade plan allows refineries, power plants and other large-scale facilities to continue emitting pollutants in poor neighborhoods as long as they purchase emission offsets.


Timothy O’Connor of the Environmental Defense Fund strongly supported the air board’s decision, saying, “The cap-and-trade program isn’t going to let polluters off the hook” because it is one of scores of programs and regulations that, combined with AB 32, promote public health.

The air board also addressed environmental justice concerns by saying that it would consider a fund drawn from carbon trading revenues to improve environmental conditions in low-income communities.

“I don’t think there is anybody who serves on this board who doesn’t believe that breathing healthy air is a right that every Californian should have,” Nichols said.