An Unclear Course on Emissions Policy
Published: May 29, 2011
SAN FRANCISCO — Opposition to cap and trade, a regulatory tool for curbing greenhouse gas emissions, normally comes from the right end of the political spectrum, where it is derided as “cap and tax.”
Ben Margot/Associated Press
But in California it is the political left that has been most successful in challenging the effort, creating a legal speed bump of sorts that might even delay the nation’s first statewide cap-and-trade system, set to start on Jan. 1.
A San Francisco Superior Court judge ruled this month that an analysis undertaken under California’s groundbreaking law to combat climate change gave short shrift to alternative ways of putting a price on greenhouse gas emissions. The judge, Ernest Goldsmith, ordered California air regulators to provide a more detailed examination of all options for controlling emissions, including a direct tax on them.
Environmental justice groups had sued to block the cap-and-trade program. The crux of their argument was that in focusing strictly on climate-warming gases that are dispersed high in the atmosphere, California’s plan could overlook or indirectly abet the release of conventional pollutants that mainly harm low-income communities, like carbon monoxide or deadly fine particles from oil refineries.Environmental groups will continue to try to protect their communities if state officials “want to steamroll ahead single-mindedly in pursuit of cap and trade, as if California is some kind of pilot project,” said Brett Newell, a lawyer for one plaintiff, the Center on Race, Poverty and the Environment.
Most economists and policy makers predict that the cap-and-trade program will go forward once the judge has accepted a new analysis as sufficiently thorough. For them, the bigger question is what role California’s system will play now that there is no prospect of a similar national initiative.
California’s climate change law, passed in 2006, was once seen as a beta test for a national push to limit greenhouse gases. Cast as a market-driven strategy that was preferable to a tax, cap and trade drew considerable bipartisan support before the nation’s political landscape shifted, climate legislation fizzled in Congress and the economic model became a focus of derision for ascendant Republican conservatives.
Will California keep the cap-and-trade flag flying regardless over the next decade and eventually influence policy in other states? Or will it prove marginally relevant at best to any national policy conversation?
“Now that the big program has gone into abeyance for some time, the pilot project looks pretty isolated,” said Steve Hayward, an economist with the conservative American Enterprise Institute.
Even economists who firmly support cap and trade are not sure whether the California program should be considered the vanguard of a distant revolution or a rebel stronghold facing daunting odds.
“It is sort of like keeping a flame alive during what is politically an exceptionally difficult time,” said Robert Stavins, director of the environmental economics program at the Kennedy School of Government at Harvard. “It is now the center of any kind of action.”
The cap-and-trade plan, which calls for reducing California’s greenhouse gas emissions to 1990 levels by 2020, sets a ceiling on climate-warming emissions by the industrial, electricity, transportation and other sectors that will gradually be lowered over time. Companies will be allocated emissions allowances, and as they progress in cutting their emissions, they can sell their unneeded credits to other polluters.
Dr. Stavins suggested that California’s program could eventually link up with the Regional Greenhouse Gas Initiative, a more limited cap-and-trade program involving electric utilities in the Northeast and Middle Atlantic. That combination would create a larger market for emissions allowances.
But “for the time being, that’s not clear,” he acknowledged. The Regional Greenhouse group suffered its own setback last week when Gov. Chris Christie pulled New Jersey out of the 10-state compact, arguing that cap and trade was ineffective.
And a group of states and Canadian provinces, known as the Western Climate Initiative, has effectively been abandoned for the time being by every state but California. (British Columbia and Ontario are still on track to begin their own emissions-trading programs next year, and Quebec could soon follow.)
In California, optimism remains the regulators’ public position. Mary Nichols, chairwoman of the California Air Resources Board, predicts that the state’s multipronged greenhouse-gas-reduction plan will face more and more friendly competition from other states like New York, Massachusetts and even Texas in areas like creating incentives for development of renewable energy.
Global warming is cited far less frequently as a policy concern these days in the current political climate, Ms. Nichols said, but she maintains that progress is being made in cutting fossil fuel emissions nonetheless. “I think climate itself may be out of favor at the moment as the reason for working on these issues, and energy security and petroleum reduction are in,” she said. “Either way, I see there’s a lot of action going on.”