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Calif. unlikely to spur federal emissions cap soon

Associated Press Modified: November 15, 2012 at 3:31 am •  Published: November 15, 2012

SAN FRANCISCO (AP) — California's new system for limiting industrial greenhouse gas emissions by putting a price on carbon is not likely to spur a similar federal program anytime soon, but it might influence other states to follow suit, energy policy experts said.

The state's Air Resources Board on Wednesday began auctioning permits called "allowances" for greenhouse gas emissions, launching the world's second-largest marketplace for carbon emissions.

Under the "cap-and-trade" program, the state sets a limit, or cap, on emissions from individual polluters. Businesses are required to either cut emissions to the cap levels or buy allowances through the auction from other companies for each extra ton of pollution discharged annually.

The results of Wednesday's closed, online auction — indicating the price companies paid to emit a ton of carbon, and how many companies participated — would be released Nov. 19, the board said.

Energy policy experts said lawmakers in Washington, D.C., are watching California's experiment closely, but it would likely take six months to a year to know its effects on the economy.

"In the short term, California's carbon market is unlikely to change our paralysis on climate legislation in Washington. But it will carry immediate impact with other jurisdictions looking at carbon markets, whether they be other states or other nations around the globe," said Tim Profeta, director of the Nicholas Institute for Environmental Policy Solutions at Duke University.

"Over the longer term, the success or failure of California to limit emissions in the world's ninth-largest economy will have a great influence on the conventional political wisdom regarding whether a federal climate approach is feasible."

The cap-and-trade plan is a central piece of AB32, California's landmark 2006 global warming regulations.

Only the European Union has implemented a similar plan in terms of scope, and it currently operates the world's largest carbon marketplace. A much less inclusive cap-and-trade scheme covers only electricity producers in the northeastern United States.

If the California program fails, it would be a devastating blow to carbon control efforts nationally, said Severin Borenstein, a professor at the University of California, Berkeley, and an expert on energy economics.

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