Calif. Cap-and-Trade Work Gets Go-Ahead

by | Jun 27, 2011

The State of California can push ahead with plans to implement a carbon cap-and-trade system, a state appellate court has ruled, according to Reuters.

The decision puts regulators on course to launch the market on schedule in January 2012.

California state law requires that greenhouse gas producers reduce emissions to 1990 levels by 2020. Point Carbon calls Friday’s decision by the California First District Court of Appeal “the latest chapter in a months-long legal battle” by the state Air Resources Board to meet the requirement.

In an April decision, a San Francisco Superior Court judge said that the board had failed to sufficiently study alternatives to carbon trading. A May 20 decision by the judge ordered air board officials to pause work on the planned market. But in early June the board won a temporary stay on that order from the appellate court.

The Friday ruling by the appellate court extends the temporary stay, allowing work on the cap-and-trade system to continue while the ARB waits for a decision on a long-running legal challenge.

That challenge, brought by environmental group the Association for Irritated Residents, alleges that the planned trading system could actually damage air quality in parts of California, reports BusinessGreen.

“Absent any further appeal or development, this means that California is permitted to continue work on its cap-and-trade program while the appellate court hears the full merits of the state’s appeal of a lower court’s decision,” Cara Horowitz, an attorney with the UCLA Emmett Center on Climate Change and the Environment, told Reuters.

The Air Resources Board released it proposed cap-and-trade regulations in November 2010.

If implemented, the cap-and-trade program will apply to about 85 percent of greenhouse gas emissions in the state from 360 businesses, the Bay Citizen reports. Those industries impacted include large industrial emitters, the electricity sector and fuel distributors.

The cap-and-trade rules would place a limit on greenhouse gas emissions for the state. This cap would decline over time at a rate of about two percent a year from 2012 to 2014 and about three percent a year after 2015. Under the plans, companies would also be able to purchase carbon credits or offsets to meet the required emission cuts.

Two weeks ago, the Air Resources Board revealed a draft analysis drawn up in response the Superior Court judge’s order, required the board to show that it had adequately considered alternatives to the state’s proposed cap-and-trade system. A 45-day comment period on the analysis is now underway.

Look for an analysis of California’s plans and other carbon trading systems in the next issue of EL Insights.

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