“I think it’s a mistake to think that emission trading alone will be helpful in reducing greenhouse emissions to any serious extent. I think it’s a mistake to extrapolate from the tremendous success of SO2 and NOx to greenhouse gases. And I think the policy debate inside the Beltway is based on a superficial understanding of the similarities between greenhouse gases and Clean Air Act pollutants.”
— UC-Berkley professor Michael Hanemann ($ub. req’d), who just published a paper [PDF] comparing California’s multi-pronged strategy to fight climate change to RGGI, the CAA, and federal cap-and-trade plans.
(Excerpt from the paper under the fold [my emphasis].)
California’s approach to emissions control differs in several respects from the approaches adopted by the federal government in the CAA and by RGGI.
With the CAA, the legislation specified all the key design features, including the two phases of the cap on emissions and the allocation of emissions allowances to generating units. By contrast, AB 32 sets a broad policy goal and specifies a general timeline, but leaves all the details of implementation to be determined through a future administrative process directed by CARB.
AB 32 differs from RGGI in its motivation, objectives, and implementation. RGGI was motivated by a desire to create a template for a national emissions trading program to control GHG emissions. California, by contrast, was building on its own past experience in regulating pollution: AB 1493 built on the California Clean Air Act of 1988, and AB 32 built on AB 1493. While California lawmakers certainly recognized climate change as a global problem, they were especially mindful of the damage that it might cause in California. As with other air pollution, they were approaching it, in essence, as a local problem that calls for local action.
RGGI focuses on CO2 emissions from electricity generation, while California focuses on all GHG emissions from all sources. With electricity, RGGI places the regulatory burden on the individual power plants, while California is likely to place it on the first seller (often the retail utility). In effect, RGGI focuses more on modifying the functioning of existing power plants, while California focuses more on demand reduction through increased energy efficiency, promoting renewables, and influencing the design of new fossil fuel plants through the restriction on new long-term power contracts, changes that first sellers are in a better position to encourage.
While RGGI sees emissions trading as its policy tool, California is likely to adopt a mixed approach with different strategies for different sectors, including regulatory measures and best management practices and incentives, as well as emissions trading. For example, CARB’s implementation of AB 1493 is structured to function as either a direct regulation of fleet emissions or a downstream cap on the automobile industry within a broader emissions trading system. The role of emissions trading in the implementation of AB 32 relative to other policy tools remains to be determined.
Finally, while California and RGGI share a near-term goal of reducing emissions by 2020, California has an additional and more challenging long-term goal of substantially decarbonizing its economy by 2050. Achieving this long-term goal requires not only immediate emissions reductions, but also an emphasis on technology development and transformation of the energy industry.
