California Adopts Cap-and-Trade
The Wall Street Journal reports:
California regulators late Thursday adopted the first large-scale cap-and-trade program in the U.S., in a move officials say will protect the environment without hurting the state's still-struggling economy.
In a 9-1 vote, the state Air Resources Board voted to adopt rules, scheduled to start in 2012, that place a limit on greenhouse-gas emissions for the state that will decline over time.
Power plants, refineries and other industrial facilities that emit carbon dioxide and can't cut their emissions by the required amount will be able to obtain pollution allowances from the state or buy them from other emitters with excess allowances.
Gov. Arnold Schwarzenegger said the cap-and-trade rules will help fight climate change and also boost California's clean-technology industry and overall economy.
"Billions of dollars are being poured into California in clean technology venture capital investment," Mr. Schwarzenegger said. "Of course, we have to be sensitive because it's an economic downturn, and this Air Resources Board knows they have to be sensitive. But we have to reach our goals by 2020."
Companies with facilities that emit carbon dioxide could also purchase carbon credits, or offsets, tied to emission-reduction projects, such as forests that are managed to contain carbon dioxide, to comply with required emission cuts.
Air Resources Board Chair Mary Nichols said there was still work to be done, including ensuring safeguards against manipulation of the market-based program and establishing a "community benefits fund" that would use some auction funds to help low-income families manage potential increases in energy prices.
She added that the board was mindful of proceeding with the rules without overburdening consumers, businesses or the economy. "We are being cautious and careful within the context of a very bold effort," Mrs. Nichols said.
The new rules come less than a week after the world's nations reached agreement on a package of climate initiatives last week at a United Nations-sponsored summit in Cancun, Mexico. And they come six weeks after a referendum in which Californians voted to keep the state's climate law intact. A federal proposal to limit U.S. greenhouse-gas emissions, however, has stalled in Congress amid political bickering.
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