Climate Change: Cap & Trade at Standstill

By Published On: May 20, 2011

Ongoing litigation continues to put a damper on prospects for opening a carbon cap-and-trade market in California at the beginning of next year. As early spring turns toward late spring, the California Air Resources Board has yet to carry out any of the activities it announced early this year that it needs to do to open the carbon trading market. Among the activities the agency promised by now were workshops on offset protocols, complying with the cap-and-trade program rules, and a workshop dedicated to the electricity industry covering reporting requirements, long-term electricity contracts, and how the board planned to treat voluntary use of renewable electricity, above and beyond what’s required. The Air Board also planned to hold a meeting on the details of the program’s market operations. As time goes by, Air Board spokesperson Stanley Young deflected the litigation, instead promising that the agency is “still developing approaches internally to these issues, so they’re not ready for prime time yet.” The litigation is The Association of Irritated Residents, et al. v. California Air Resources Board in San Francisco Superior Court. * * * * * The second release of a model being developed for the California Public Utilities Commission to project how the state’s climate change program and 33 percent renewable energy standard will affect the power industry shows that if aggressively carried out, the price of electricity would be 13.4 percent higher. The model showed it would be about 16.9 cents/kWh in 2020 under the aggressive scenario compared to 14.9 cents/kWh under the slacker reference case. By 2020, low carbon generators and power importers would see profits increase by some $700 million due to the higher price of carbon emissions rights, the model showed. The reference case assumes 20 percent renewable energy, with 847 MW of solar rooftops, 16,450 GWh of energy efficiency, a 5 percent demand response level, and 292 MW of combined heat and power. The aggressive case assumes 33 percent renewable energy, 3,000 MW of distributed solar, 36,559 GWh of energy efficiency, 4,378 MW of combined heat and power, and the same 5 percent demand response level. The model by Energy & Environmental Economics was aired earlier this month at the CPUC. * * * * * California faces competing claims on dollars for infrastructure due to climate change, according to Stanford biology professor Paul Erlich. He is best known as the author of The Population Bomb, published in 1968. In a May 15 address sponsored by the University of California at Los Angeles Institute of the Environment, Erlich said climate change argues for a move away from fossil fuel at the same time it’s going to require continual redesign and rebuilding of water infrastructure--from dams to levees and aqueducts. That, he said, is because the state and Western region’s hydrology is continuously changing due to climate change. Erlich said so far models cannot predict hydrological changes very well, which likely means continually adapting water infrastructure to climate change into the foreseeable future.

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