In an essay examining carbon pricing efforts around the world, Jeffrey Ball, writing in Foreign Affairs, referenced Near Zero’s report, California’s climate emissions are falling, but cap-and-trade is not the cause:
California, the world’s sixth-largest economy, has had similar problems. Although it produces only about one percent of global greenhouse gas emissions, it has long been a bellwether for environmental policy, imposing regulations that are later adopted across the country and around the world. The state launched its cap-and-trade system for carbon in 2012, part of a broader plan to cut its emissions to 1990 levels by 2020—a goal less ambitious than the EU’s but more ambitious than the U.S. federal government’s. California is all but sure to meet that target. But even though emissions from power generation covered by its cap-and-trade system fell in 2016, those related to transportation—the state’s biggest source of carbon emissions—rose that year. What’s more, as an analysis released last year by Near Zero, a nonprofit research group in California, concluded, the decline in power plant emissions owes little to carbon pricing. Instead, it is largely the product of an increased use of hydropower (a result of higher rainfall) and a greater production of wind and solar power (a result of state renewable energy mandates). As of mid-May, California’s carbon price was around $15 per metric ton. It was that low because factors other than the carbon market led power producers to curb their emissions, leaving companies with extra permits that they had gotten from the state for free.
Like Europe, California is moving to add more bite to its carbon-pricing system. It wants to force far deeper emission cuts, in line with the EU’s ambitions: to 40 percent below 1990 levels by 2030 and 80 percent below 1990 levels by 2050. A plan now under consideration could increase the carbon price to between $81 and $150 per metric ton in 2030. If such a higher price materializes, it should spur big cuts in emissions. But the state has yet to decide on the proposed plan, and the fight is intense. In public hearings and through private lobbying, oil producers and power companies are sparring with environmental groups. In March, an official from Pacific Gas and Electric, California’s largest utility, told state officials that a 2030 carbon price of $150, a level that some environmentalists call sensible, would be “very high” and would not “strike that appropriate balance” between planet and pocketbook.
Read the full article, “Why Carbon Pricing Isn’t Working,” by Jeffrey Ball on the Foreign Affairs website.