The rules adopted by the Air Resources Board, the state's climate change regulator, limit emissions of carbon dioxide and other greenhouse gases and let power plants, factories and eventually refiners and others to trade permits to pollute in a program generally known as cap-and-trade.
California will become the second-largest carbon market in the world, following a European system. Point Carbon, a Thomson Reuters company, forecasts the market will grow from $1.7 billion in 2012 to nearby $10 billion in 2016, with prices rising from $10 a metric ton in 2012 to $18 per ton in 2016.
Environmentally, California's move could rank with U.S. efforts decades ago to clean up air and water, said Gary Gero, President of the Climate Action Reserve. "We will say this was when the United States started seriously building a program for climate change," he said.
Calls to force companies to buy permits at auctions have largely been rebuffed due to the weak economy. Most permits will be given away, especially in the first three-year period.
Factories and power producers will be able to bear some of the burden for cutting emissions with credits for projects that soak up carbon, known as offsets. There is already a market in such offsets, and prices have jumped in the last several weeks to about $8 a ton, traders said.
So as the carbon market generates billions in needed income and reduces emissions, how long will it take before the other 6/7ths of America follows suit? This should go a long way towards getting both sides of the aisle in gear, and the EPA should take a long hard look at California's requirements here.
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1 comment:
Really good to hear that California adopted such a revolutionary step. In Europe, it's working quite well and countries are making quite revenue, although some of them seem to be too corrupted to cope with the system and make the most of it. But in a almost corruption-free environment such as U.S. it's a hopeful thing. Sure hope other states will follow soon.
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