The only other emissions trading system, the Regional Greenhouse Gas Initiative, is trading carbon among Northeast and mid-Atlantic utilities.
Derek Walker, strategic climate initiatives director for the advocacy group Environmental Defense Fund, said state officials “take it seriously that this is a make-or-break moment. Doing this well is a way to show you can have a strong environmental policy that doesn’t hurt the economy, and not doing it well is a huge setback for environmental policy globally.”
But many in California’s business community have questioned why the state is auctioning off 10 percent of the allowances, rather than giving them all away for free. Catherine Reheis-Boyd, president of the Western States Petroleum Association, said the auction “puts California at a competitive disadvantage” because the six states initially slated to join it in a Western compact — Arizona, Montana, New Mexico, Oregon, Utah and Washington — have dropped out.
Inslee, the former congressman locked in a tight race for governor, has pledged to restart efforts to connect Washington’s climate program with those of other states.
Robert Stavins, who directs Harvard University’s environmental economics program, said it is “likely to be effective” but is “going to be controlling emissions at a higher cost to the economy” by requiring all of the auction revenue to be spent on reducing emissions. He added that there are “legitimate concerns” about whether California’s imported electricity, which makes up half of its carbon emissions, may end up selling fossil-fuel energy to other states while directing its renewable sources toward California utilities.
In a statement, California Air Resources Board Chairman Mary D. Nichols said the program has already produced economic benefits because “as a first mover California is already receiving the lion’s share of the country’s clean tech investment.”
Gary Gero, president of the Climate Action Reserve, whose group provides offset credits for firms seeking to compensate for their carbon emissions, is brokering agreements to preserve forests, destroy ozone-depleting substances and capture methane emissions from dairy and swine farms. But he noted, “The goal is to have a program no one notices. If the public isn’t aware there’s a cap-and-trade program, and nobody notices, that’s a good thing.”