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Emissions Drop Not Due To Cap And Trade — Study

November 15, 2017

By Debra Kahn, CLIMATE WIRE

https://www.eenews.net/climatewire/stories/1060066583

As California Gov. Jerry Brown touts his state's economy-wide carbon cap-and-trade program at U.N. talks in Bonn, Germany, critics of the policy are taking the opportunity to launch jabs back at home.

The Democratic governor has been advocating for the expansion of cap and trade, suggesting last week that the state should link its market with the European Union's Emissions Trading System. Emissions covered by the California program fell 5 percent last year, according to data released by the California Air Resources Board last week, putting the state well on track to meet its 2020 goal of reaching 1990 emissions levels (Climatewire, Nov. 7).

Yet a study by Near Zero, a think tank affiliated with the Carnegie Institution for Science at Stanford University, finds that the reductions aren't likely attributable to cap and trade itself. Rather, the paper says, the drop was largely due to other policies, like the state's renewable portfolio standard (RPS) for electricity.

Consumer Watchdog, a group that criticized this year's bill to extend cap and trade through 2030 for containing too many industry-friendly provisions, held up the paper as proof of its stance.

"While Gov. Brown pushes market-based solutions in Europe that clearly aren't working at home, the results back home show those solutions aren't working because the approach is too lax," said consumer advocate Liza Tucker.

The biggest drop in greenhouse gas emissions last year came from electricity, which saw a shift from natural gas to hydro power. Much of that was likely due to the increased supplies of hydro power available after the state's five-year drought ended. Other increases in renewable generation were due to the state's RPS and incentives that promote rooftop solar. Meanwhile, emissions from transportation fuels and refining saw a slight uptick.

The reductions are "coming in the sector where, frankly, a lot of the other policies are doing the work," said Near Zero research associate Danny Cullenward, who was named by state Senate President Pro Tempore Kevin de León in September to a committee that tracks the economic and environmental performance of the cap-and-trade market. No other members have yet been named to the five-person committee, which was created by A.B. 398, the bill that extended the market to 2030 earlier this year.

Cullenward also pointed out that a chronic oversupply of allowances, as well as the legal uncertainty that plagued the cap-and-trade program until this year, meant that companies should logically not have been expected to make financial decisions based on the program's stringency.

California regulators are currently mapping out their emissions reduction route to 2030, when they are aiming to reach 40 percent below 1990 levels. The Air Resources Board needs to design its post-2020 cap-and-trade program to achieve roughly 43 percent of the reductions as envisioned, Cullenward warned.

"Anyone who's serious about the markets has to address this issue," he said.

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