CALIFORNIANS FIGHTING CAP-AND-TRADE

Economists typically see a tax on greenhouse gas (GhG) emissions as the most effective way government can mitigate climate change.

California Gov. Arnold Schwarzenegger, master of the politically possible, is leading the charge for a cap-and-trade system. A cap-and-trade system sets an iron-clad cap on emissions by each business or manufacturing entity and allocates credits for the allowed emissions. An entitiy can only exceed its cap by buying credits from another entity that finds a way to do business at emissions below its capped level. Entities that find ways to cut emissions can profit by selling their excess credits in an emissions trading market. Entities generating excessive emissions must buy extra credits in the market or face procrustean fines.

Cap-and-trade is considered a less certain weapon against climate change because the tax can be set progressivley higher until emissions are too costly while markets are less predictable. But the tax is a creature of big government while cap-and-trade "partners" with the marketplace. A trading system was used effectively in the late 1980s and early 1990s against acid rain pollution and another is presently being tested and tweaked by the European Union.

California’s Air Resources Board (CARB) is working out a cap-and-trade plan, required by law to be in place by the end of this year, to cut the state’s GhG emissions to 1990 levels by 2020. After extensive consultations, CARB is clear that cap-and-trade is the choice of politicians and pragmatists while economists and perfectionists want a tax. What is more difficult is that some California environmentalists are siding with the economists.

Angela Johnson Meszaros, director, California Environmental Rights Alliance: "Cap-and-trade is a charade to continue business as usual…"

Resistance to cap-and-trade may spread beyond the narrow spectrum of economists and idealistic environmentalists but for now there is an inevitability to a trading system. Governor Schwarzenegger is organizing a group of western states and western Canadian provinces into a regional trading program. Another system is emerging in the northeast. A national program is expected to come before the Senate after the November election. It is sponsored by Republican Senator John Warner (Va) and Independent Senator Joe Lieberman (Conn) and it is endorsed by Presidential candidates/Senators McCain (Az), Clinton (NY) and Obama (Ill).

Opposition to cap-and-trade in California is so far from lesser-known environmental groups while the more widely recognizable "name" environmentalists (ex: Natural Resources Defense Council, Sierra Club) have not taken a side on the issue.

The most succinct way to convey the tone and character of the California Environmental Justice Movement’s opposition is to let it speak for itself:

“…BE IT THEREFORE, RESOLVED, that the California Environmental Justice Movement stands with communities around the world in opposition to carbon trading and offset use and the continued over reliance on fossil fuels; and

BE IT FURTHER RESOLVED, that the California Environmental Justice Movement will support conservation, regulatory, and other measures to address greenhouse gases only if they directly and significantly reduce emissions, require the shift away from use of fossil fuels and nuclear power, and do not cause or exacerbate the pollution burden of poor communities of color in the United States and developing nations around the world; and

BE IT FURTHER RESOLVED, that the California Environmental Justice Movement will oppose efforts by our state government to create a carbon trading and offset program, because such a program will not reduce greenhouse gas emissions at the pace called for by the international scientific community, it will not result in a shift to clean sustainable energy sources, it will support and enrich the state's worst polluters, it will fail to address the existing and future inequitable burden of pollution, it will deprive communities of the ability to protect and enhance their communities…”

From stated criteria, the Governor and CARB do not intend problems - but does the system create the problems? (click to enlarge)

Proponents of cap-and-trade insist the key to success is the accurate determination of what portion of emissions credits should be freely alloted to GhG producing business entities and what portion should be auctioned. If too many credits are given free, the price goes down and there is no disincentive to emit. If too many are auctioned, the price is too high and both trade and business activity are impeded. If the auctioned portion of credits is in the right range, businesses will participate and emissions will be reduced.

Some argue that the funds raised from the credit auction can assuage any harm done to poor communities by the trading system. Others are dubious.

Groups vow to fight carbon emissions cap-and-trade plan
Margot Roosevelt, February 20, 2008 (LA Times)

WHO
California Gov. Arnold Schwarzenegger; Mary Nichols, chairwoman, California Air Resources Board (CARB); Jane Williams, California Communities Against Toxics; Angela Johnson Meszaros, director, California Environmental Rights Alliance; CARB Environmental Justice Advisory Committee, Jane Williams and Angela Johnson Meszaros, co-chairs;

The basic problem. (click to enlarge)

WHAT
The California Environmental Justice Movement’s Declaration on Use of Carbon Trading Schemes to Address Climate Change

WHEN
2006: California passed AB32 requiring 25% reduction of GhGs by 2020.

The basic solution - and much credit to Arnold for leading the way. But how much political pushback will there be? (click to enlarge)

WHERE
The "Environmental Justice Movement Declaration" comes from a coalition of groups in 5 cities: Los Angeles, Fresno, Oakland, Sacramento and San Diego

WHY
- The Environmental Justice Movement Declaration lists 21 points of objection to the EU ETS cap-and-trade system and the general concept.
- The 18 group-coalition includes the San Joaquin Valley Latino Environmental Advance Project, Oakland's West County Toxics Coalition, the L.A. chapter of the Physicians for Social Responsibility and Delano's Assn. of Irritated Residents.
- The coalition wants fees on all GhG emissions.

California's timeline. No doubt the federal government will be coming along behind. (click to enlarge)

QUOTES
- Jane Williams, California Communities Against Toxics: "Under a trading scheme, 11 power plants to be built around Los Angeles could offset emissions by extracting methane from coal seams in Utah or planting trees in Manitoba…"
- Mary Nichols, chairwoman, CARB: "[Climate change requires] the most cost-effective solution to reducing emissions…This problem is too big and complicated to rule any technique off the table."
- Angela Johnson Meszaros, director, California Environmental Rights Alliance: "We're concerned that proceeds from an auction won't be applied to transitioning us to a zero-carbon future. State law requires that fees be used for the issue for which the fee is assessed. But with budget shortfalls in California, proceeds from an auction are going to be sucked into filling the holes."