Sunday, November 27, 2016

A Key Moment for California Climate Policy

                                                      Comments due by Dec4, 2016
The past year has been a crucial time in international climate negotiations.  In December, 2015, in Paris, negotiators established an agreement on the next round of targets and actions to succeed the Kyoto Protocol, which was signed in 1997 and will effectively close down in 2020.  In Paris, negotiators set up a new and meaningful agreement for multinational action through individual country “Intended Nationally Determined Contributions” (INDCs).  The Paris round was crucial, because it expanded the coalition of contributionsfrom countries responsible for 14% of global emissions under Kyoto (Europe and New Zealand) to 187 countries responsible for 96% of emissions under the Paris Agreement.
California’s Role in Global Climate Change Policy
California sent a delegation to the Paris talks. While not officially a party to the negotiations, California government officials attended to show support for broad and meaningful action.  For many years, spurring action beyond California’s borders has been the key rationale for developing a California-based climate policy.  This began with Assembly Bill 32 (AB 32), the Global Warming Solutions Act of 2006.  Initially, the focus was on encouraging action within the United States, including federal legislation, state-level actions, and multi-state compacts, but subsequent domestic action turned out to be much less than originally anticipated. As a result, California’s focus shifted to the international domain.
This is a good time to consider how the State can best demonstrate leadership on this global stage.  Action by all key countries, including the large emerging economies – China, India, Brazil, Korea, and South Africa – will be necessary to meaningfully address the climate problem.  Significant multinational contributions will be necessary to avoid having California’s aggressive in-state actions be for naught.  Absent such multilateral action, ambitious California policies do little or nothing to address the real problem.
But California can play a very important role by showing leadership – in two key ways.  One is to demonstrate a commitment to meaningful reductions in (greenhouse gas) GHG emissions.  In this regard, California has more than met the bar, with policies that are as aggressive as – if not more aggressive than – those of most countries.
The other way is to show leadership regarding how reductions of GHG emissions can best be accomplished – that is, in regard to progressive policy design.  California has a sophisticated GHG cap-and-trade system in place, which while not perfect, has many excellent design elements.  Countries around the world are now planning or implementing cap-and-trade systems, including in EuropeChina, and Korea.  These countries are carefully watching decisions made in California, with particular attention to the design and implementation of its cap-and-trade system.  California’s system, possibly with a few improvements, could eventually be a model for even larger systems in other countries.
Can California Provide a Good Model of Progressive Policy?
Unfortunately, California’s climate policy has not relied heavily on its cap-and-trade system to achieve state targets.  Furthermore, rather than increasing reliance on this innovative market-based climate policy over time, recent proposals have doubled-down on the use of less efficient conventional policies to achieve GHG reductions. While some of these so-called “complementary policies” can be valuable under particular circumstances, they can also create severe problems.
One example of this is the attempt to employ aggressive sector-based targets through technology-driven policies, such as the Low Carbon Fuels Standard (LCFS).  In the presence of a binding cap-and-trade regime, the LCFS has the perverse effect of relocating carbon dioxide (CO2) emissions to other sectors but not reducing net emissions, while driving up statewide abatement costs, and suppressing allowance prices in the cap-and-trade market, thereby reducing incentives for technological change.  That is bad news all around.  These perverse outcomes render such policies of little interest or value to other regions of the world.
The magnitude of the economic distortion is illustrated by the fact that allowances in the California cap-and-trade market have recently been trading in the range of $12 to $13 per ton of CO2, while LCFS credits have traded this summer for about $80 per ton of CO2.
While reduction in transportation sector GHG emissions is clearly an important long-run objective of an effective climate policy, if the approach taken to achieving such reductions is unnecessarily costly, it will be of little use to most of the world, which has much less financial wealth than California and the United States, and will therefore be much less inclined to follow the lead on such costly policies.
The Path Ahead
With China now the largest emitter in the world, and India and other large developing countries not very far behind, California policies that achieve emission reductions through excessively costly means will fail to encourage other countries to follow, or even recognize, California’s leadership.  On the other hand, by increasing reliance on its progressive market-based system, California can succeed at home and be influential around the world.


  1. I find of particular note the authors' reluctance in including Russia as a necessary participant to lower emissions on a global scale. I suppose their tendency not to participate in initiatives such as these is to blame, but it is worth being said that their impact would be significant.

    The cap and trade program seems to me an excellent idea in order to ultimately reduce emissions. The LCFS on the other hand, while it includes the cap and trade program, is not so much looking to reduce the net emissions but to put emissions to their best use via the free market. I think that this is pretty self explanatory in that it is inherently incorrect. While this is a difficult idea to prove, I believe the common individual does not care for how much they contribute to their carbon footprint, whether or not their products are green and rather cares more for the best bang they can get out of their buck. This belief of mine backs the idea that the LCFS does indeed ultimately fail in reducing net emissions. Rather, emission credits are provided to businesses that are able to amass the capital to buy them out. While I don't doubt for a second that policies exist to deter this and encourage greener businesses' inclusion, I do have little faith in how successful these efforts are.

    California stands at the pinnacle of American green efforts. As one of the worlds largest economies it has become an increasingly important effort to include new initiatives with every unique individual that enters a position of power. I believe that the world stands to benefit from something that sounds as trivial as getting as many new and unique individuals into these positions as possible for this reason.

  2. The transition to aspects of a green economy is a difficult one, which explains why countries are hesitant and slow to change. California's act of changing and working to limit harmful emissions into the planet is an important one, as their actions could begin to influence the other states in this country, which could further influence other countries around the world. While one state doesn't seem like such a big deal, eventually it could lead to others changing their emission standards as well.

    As of now, California has an established cap-and-trade system in place, and it is now becoming established in other countries such as parts of Europe and China. Countries like these are watching the things California is doing. This further proves that California's act of reducing emissions is important, because other states and countries are seeing how they implement the plan and how it plays out before they decide if they are going to follow. This could eventually impact the planet in a very positive way, even if it seems like something that won't happen for a long time right now.

  3. California’s efforts to pass legislation to reduce greenhouse gases have been very successful. California has shown a dedication to reducing GHG through aggressive policies. California’s initial goal was to encourage action from within the United States, which would include federal legislation, state-level actions, and multi-state compacts. However, the US took little action while California began leading the way on how to reduce GHG emissions. It’s very interesting to see that a California delegate was sent to the Paris talks. It shows that they are truly committed to change and protecting the environment.
    California’s cap-and-trade system was in put in place to put a limit on the amount of carbon emissions allowed and minimizes the total costs to emitters while achieving their target. This limit is translated into tradable emission allowances, which are allocated to the regulated emitters on a regular basis. At the end of each compliance period, each regulated emitter must surrender enough allowances to cover its actual emissions during that period. The total number of allowances decreases over time to reduce the total amount of GHG emissions.
    By creating this market, and price, for emission reductions, the cap-and-trade system offers an environmentally effective and economically efficient response to climate change. With a system like this in place it doesn’t seem logical to continue with the Low Carbon Fuels Standard. It doesn’t reduce carbon emissions but simply relocates emissions to other sectors. It also drives up abatement costs and suppresses allowance prices in the cap-and-trade-market. Reducing carbon emissions is important but it needs to be cost effective in order for other less wealthy countries to participate as well
    The United states needs to catch up to California’s policy changes and focus more on how to reduce GHG emissions and protect the environment from further damage. California is doing a lot to change but without the backing of the United States these policies will never be federally in place. We need to have everyone work together to solve this problem.

  4. This is an interesting article. California has already been facing the severe negative effects if climate change such as droughts and wildfires. It focuses on California as a leader in climate resolution which isn’t necessarily new information to me, however, I never knew the level of importance at which the state holds on an international field. I do have my concerns. The article favors the cap and trade system which is a wonderful, market based system but there are many skeptics of the system. I spent a little time searching the success of the cap and trade system and I couldn’t find anything good. For instance, the initial auction of the permits only sold 2 percent of the 44 million. They only raised 8.4 million out of the expected 620 million, according to Forbes. That, to many, is considered a failure. For the businesses that did purchase the permits, they have the risk of losing the worth of the permits if the cap and trade system is revoked. The revenues from the cap and trade system are also tied to a new high speed rail system in the state which, according to the wall street journal, will emit a large amount of GHGs. Now, all this skepticism doesn’t mean the cap and trade program is an awful idea but the article only mentions once that it is “not perfect” and focuses more of critiquing the LCFS, which is interesting.

  5. California's efforts to promote green economy not only nationally but internationally, sounds promising. Even though California is not an official part of the Paris negotiations, sending government officials to show support of the topic shows that they want to take a part in changing and influencing other country's environmental policies. Even though California's domestic actions whether it be state level or multi-state level compact, were much less than expected. However, allowed California to focus their efforts internationally rather than just in the United States. One of the environmental policies implemented in California, the GHG cap and trade system, is hopefully going to be adopted by European countries, China and Korea, although there is speculation about its success. All of the countries which plan to adopt the cap and trad system are closely observing California's design and implementation of these policies. This to me, shows that they are already being considered as a environmental model for other countries to get influenced by. This really is a big opportunity for California to become influential on a global scale. The United States, always has a big presence and influence over many countries in Europe and Asia. I don't see a reason why California could not be very influential when it comes to environmental policies. The most important thing to consider would be costs. Therefore, I believe that if California figures a plan to reduce the costs of these policies which reduce emissions, then other countries will be more willing and open to implementing them too.

  6. For key countries such as China, India, Brazil, Korea, and South Africa, a change in their policies that favor the environment would mean an incredible success for all environmentalist and to those who understand the importance and urgency of climate change. One of the things all of the countries have in common is that they are all large emerging economies. When looked at the question of these these countries taking California's policies and seeing California as a role model of progressive policy, raises doubts and we can see that this holds many obstacles. One of which is capital. (which is one of the most important.) Theoretically, if California, the richest state in America, were to fund money to the countries to implement its policies, they would be much more willing to implement them. Countries in Europe would be the ones who would need the least funding, or probably none at all. When it comes to less wealthy countries such as India or Brazil, things would be different. They would need more initiative to even try to implement the policies.

    I find it unrealistic for California to achieve what it cannot in America. Progressive countries such as those in Western Europe would be open to the idea with the right financial plan, but other countries would speculate over the fact that California could not find the support in America, from other states, how could it find support in other countries. If California were to succeed, first it would need to perfect its policies and its implementations in California for it be able to taken seriously into considerations by large emerging economies around the world.

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  8. This article shows the leadership of California in the aspect of reducing emissions. California's actions of reducing poison emissions to the air are good way to achieve green economy. California government has established a cap-and-trade system. This system is an important model so that other states follow this system, even some countries such as Europe, China, and Korea use this system. However, this system is not very perfect, after all it's a state's idea. cap-and-trade system needs a expense cost, which means that a lot of developing countries do not have enough finance to support it. Thus, cap-and-trade system only can be used in partly areas. In my opinion, cap-and-trade system may be improved in future years and it will gradually be perfect. At this moment, it will become a real model and allows all countries to follow it.

  9. Progression in climate change policies in hopes for improvement is set out to make changes and improvement in the economy as well. For instance lets look at California’s system. As we all know, California currently has a high-level GHG cap-and-trade system with outstanding design elements, already in place. Countries around the globe especially in Europe and China are closely monitoring decisions made in CA based on the design and implementations of its cap-and-trade system. They’re closely looking at the conclusions in order to decide whether or not those countries want to plan for or implement cap-and-trade systems. If we improve on California’s system, we can possibly use that system to provide a good model of progressive policy for larger systems in other countries. The question is can California really provide such model?

    California provided an early proving ground for EDF’s climate work: EDF co-sponsored California’s Global warming solutions act of 2006 (AB 32), landmark legislation that set an absolute statewide limit on greenhouse gas emissions, and confirmed California’s commitment to transition to a sustainable and clean energy economy. The successful outcome of AB 32 provides California’s climate and energy portfolio with an excellent foundation from which to grow. Thus aligning with our national and international policies including:
    1) Implementing California’s policies, the centerpiece of which is a cap-and-trade program, aiming to expand and extend the program by 2020.
    2) Establishing complimentary policies, incentives, and market rules that help the state transition to a low-carbon, clean energy economy through promoting renewables and modernizing and automating energy options within the state.
    3) Partnering with other regions and stakeholders, to share California’s lessons and experiences from the state’s early adoption of the comprehensive climate and energy policies.

    In summation, California is definitely leading the way. By taking bold action California is a trailblazer on climate change. Marks of its success are strong government leadership, accelerated investment in clean energy, and rapid growth of businesses that contribute to the advancement of the low-carbon economy.

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  11. California has worked hard to be pro-active with their legislation toward reducing GHG emissions, often setting the bar with their aggressive leadership and policies. Their past success with policies aimed at reducing GHG has played an important role in pushing progress throughout the entire world. The future for California, along with the rest of the world, will be moving climate policy towards cap-and-trade rather than market-based. Market-based climate policy does not set predetermined GHG reduction goals but rather relies on market forces and specific economic conditions. Cap and trade policy can help achieve GHG reduction goals since it has greater flexibility, greater certainty, and it has been successful in other places where it's being implemented.

  12. California is already receiving the negative effects of climate change so it leadership is not surprising and a good step in the right direction. Like all other things policies and systems still need to be perfected but this is the type of initiative that more countries need to take to seriously reduce GHG emissions and preserve the environment. California efforts can easily be replicated by surrounding states and move the entire country in the right direction. The cap and trade policy is just the type innovation needed to get the ball rolling and drive the world forward. Although other countries may not have access to the types and range of resources California has variations and similar plans better suited for other countries can easily be derived and help reach the same goal. Eventually less effective policies will be phased out or tweaked to better serve its purpose.