California dreaming

    California's newly inaugurated carbon-trading scheme should contribute to a cleaner, greener future.

    California has the highest total emissions of any US state bar Texas. It should be welcomed, therefore, that as of 1 January this year, it now has a legally binding, state-wide emissions cap-and-trade scheme. Depending on its success — and assuming the necessary political will — similar schemes could to be introduced by other US states, although any nationwide carbon-trading scheme still seems a distant prospect.

    California has a reputation for clean technology innovation and implementation. Despite outright hostility from some quarters, the state has unilaterally forged ahead with strong environmental policies aimed at reducing emissions.

    Much of this activity, especially in the legislative arena, can be credited to former state governor Arnold Schwarzenegger, a man who continues to flex his political muscles when confronted with opposition to environmental initiatives from vested interests. The Global Warming Solutions Act that he signed into law in 2006 got the ball rolling by setting challenging emissions targets for key economic sectors. The most ambitious commitment is to reduce California's emissions to 1990 levels by 2020, with an ultimate goal of an 80% reduction from those historical levels by 2050.

    It was clear from the start that success would require the development of stringent emissions regulations, including some mandatory caps, and market mechanisms conducive to compliance.

    California's carbon-trading scheme is similar to the European Union Emissions Trading Scheme (EU ETS). Administered by the California Air Resources Board, it is a central plank of environmental policy. With the immediate aim of limiting total annual emissions to around 162 million tons, the underpinning legislation imposes strict emission allowances on the dirtiest companies. However, firms will be able to trade permits, thereby offsetting their own emissions.

    Schwarzenegger envisaged the cap-and-trade scheme as a model for other state programs in the US. California is a participant in the Western Climate Initiative, through which it, other western states and some Canadian provinces aim to harmonize their carbon-trading policies. Quebec's scheme also kicked off at the beginning of the year, but California is the only US state to take the plunge so far.

    Even setting aside legal challenges — the lawyers are already rubbing their hands with glee — the road ahead will not be easy. Emissions trading schemes have many critics, some of whom point at the teething problems experienced by the EU ETS. Will it really reduce emissions, they ask, or simply cause emissions to 'migrate' across state lines? And will carbon prices be high enough to incentivize investment in more energy-efficient technologists and lead to the creation of 'green jobs' as intended? We and no doubt others will be watching with interest and expectation, and wondering if and when other US states will follow suit.

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    California dreaming. Nature Clim Change 3, 89 (2013).

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