Covering California’s plan for meeting its ambitious greenhouse gas emission reduction target for 2030 and the large role for cap-and-trade, E&E News spoke with Near Zero’s Danny Cullenward:
The California Air Resources Board (ARB) predicts that “direct” regulations — including the state’s renewable portfolio standard, low-carbon fuel standard and new rules to slash methane, refrigerants and soot from fuel combustion — will account for 62 percent of the cumulative reductions needed through 2030.
Cap and trade is intended to fill in the gap, or roughly 38 percent of cumulative reductions. That’s a far bigger share than it has contributed to date. The state originally estimated that cap and trade would account for 20 percent of reductions through 2020. Estimates based on recent data find that it may have spurred much less than that so far, due to complementary policies like the renewables target as well as a generous cushion of excess allowances (Climatewire, Nov. 15).
The large role reserved for cap and trade hints at policy fights yet to come, say observers. The market is due for substantial revisions, and tough decisions remain about how to balance the program’s environmental stringency with the need to keep allowance prices manageable for covered businesses. The fact that ARB expects cap and trade to account for nearly 40 percent of reductions in the 2021-30 period, but also for supplies to remain high through mid-decade, indicates that a steep share of the reductions would need to happen in the final years of the program.
“That’s the unanswered question,” said Danny Cullenward, a research associate at the think tank Near Zero, who was named by state California Senate President Pro Tempore Kevin de León (D) earlier this year to a committee that tracks the economic and environmental performance of the cap-and-trade market. “It is the giant, gaping analytical problem that needs to be resolved.”
The tussle over the specifics of the plan will play out over the next year, through rulemaking mandated by A.B. 398, a bill by Assemblymember Eduardo Garcia (D) enacted earlier this year that authorizes the use of cap and trade through 2030. The law requires ARB to install a price ceiling for allowances and to at least consider what to do about the cushion of excess allowances that are projected to persist into the mid-2020s.
Read the full article, “State faces ‘giant’ questions about slashing emissions,” by Debra Kahn, on the E&E News ClimateWire website (subscription may be required).