Ucilia Wang 11 25 09, 2:17 PM

• 0
• Email
  • Recipient's Email Your Email Send me a copy

  • Thank you!
    Your article has been sent.

  • Error
    There was a problem sending your article.

• Share

Cal Inches Closer to Launch Cap-and-Trade

California regulators have released a draft plan for a program to steadily reduce greenhouse gas emissions and force businesses to limit their emissions and pay for permits if they emit above limits.

The draft plan, issued by the California Air Resources Board, aims to help the state to achieve its legislative mandate to cut emissions to the 1990 levels by 2020. The state has taken other steps to achieve this goal, such as by requiring utilities to provide more renewable electricity and nudging carmakers to make more fuel-efficient vehicles.

The proposal to cap emissions and allow trading of permits to pollute is arguably more controversial than some other measures, largely because any cap-and-trade program could impose greater costs on a wide range of industries and, ultimately, consumers.

Congress has been wrestling with climate change bills that would include carbon cap-and-trade, and results have been mixed. An early idea to auction off all of the permits didn't muster enough support in the House, which passed its bill in June this year. Utilities, automakers, oil refineries and other major sources of emissions all vied to get free allowances initially.

The U.S. Senate is debating its own version of the climate change bill now.

California began working on its own cap-and-trade plan after passing the Global Warming Solutions Act of 2006. The state has drafted the proposal in conjunction with a consortium of western states and Canadian provinces.

Under the proposal, the state would auction some of the permits at the start of the program. The program would initially target the largest sources of emissions, such as power plants and oil refineries. The state also would allow a limited use of carbon reduction projects for companies that want to use them to offset their emissions.

Each allowance is good for a compliance period set by the state and must be surrendered at the end of that period.

California would gradually limit the amount of permits it issues to force companies to reduce their emissions.

The state plans to start running the program in January 2012.