Pacific Swell

Southern California environment news and trends

ARB shows its cap-and-trade cards before voters play Prop 23 hand

While most of the rest of California is talking about whether to suspend or continue with AB 32, the state's Air Resources Board has released a plan about how they'd run the landmark greenhouse gas law's central program - the cap and trade program - and they're looking for public comment.

Starting in two years, the first phase of the cap and trade program includes electricity and large industrial facilities. Three years later they add in transportation fuels distributors, natural gas, and other fuels: so oil companies get a little time. The first cap in 2012, essentially, sets a don't-screw-up standard, at the forecast for whatever would happen anyway. Then it drops 2 percent a year, then ups to 3 percent.

The 2020 cap is about 15% below where the program starts 8 years earlier. The ARB projects that means 273 million metric tons of carbon dioxide cut from the state's output.

Industrial sources and utilities get free allowances, with the rest of credits under the cap sold at auction. Offset options include forestry, and methane; facilities can only use offsets to drop their footprint 8 percent. You can read more in a brief summary of the program here.

I'd guess - but haven't yet heard - that this isn't all environmentalists would want it to be. Other people have written convincingly about why giving away permits creates a different market than auctioning them all; ARB's plan is a compromise. The capped market begins in a couple of years; that may not be all businesses want, but it's a graduated plan: it's another compromise. The implementation group will give its opinion, and so will chambers of commerce, economists, and environmentalists. And I would guess everyone won't like something. (We'll keep you posted.)

What the ARB wants to signal here is that it's ready to go with AB 32 - and that it's not a scary, drastic option to cut carbon emissions on a market. Starting Monday, they want to know what people think about it: they're going to decide on a course of action December 16. (In keeping with the ARB's efforts to get as much regulation out the door before the end of Schwarzenegger's term.) Of course the outcome of Proposition 23 will serve as a public comment of a sort, but a less specific kind. But ARB is taking specific comments at its website - check here for more details.

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