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Earth Politics

How California's Carbon Market Actually Works 97

Posted by Soulskill from the bait-and-switch dept.
Lasrick writes: Almost 10 years ago, California's legislature passed Assembly Bill 32, the Global Warming Solutions Act of 2006. AB 32 set the most ambitious legally binding climate policy in the United States, requiring that California's greenhouse gas emissions return to 1990 levels by the year 2020. The centerpiece of the state's efforts — in rhetorical terms, if not practical ones — is a comprehensive carbon market, which California's leaders promote as a model policy for controlling carbon pollution. Over the course of the past 18 months, however, California quietly changed its approach to a critical rule affecting the carbon market's integrity. Under the new rule, utilities are rewarded for swapping contracts on the Western electricity grid, without actually reducing greenhouse gas emissions to the atmosphere. Now that the Environmental Protection Agency is preparing to regulate greenhouse gases from power plants, many are looking to the Golden State for best climate policy practices. On that score, California's experience offers cautionary insights into the challenges of using carbon markets to reduce greenhouse gas emissions.
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How California's Carbon Market Actually Works More

How California's Carbon Market Actually Works

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  • I mean, really. Who thought that would never happen?

    • Re: (Score:2)

      by digsbo ( 1292334 )
      Pretty much everybody who never read Hazlitt. Or, more accurately, people who would refuse to read Hazlitt.
      • I think you mis-read GP. It would be a surprise to those people, yes. And I think it's legit to include many who haven't read Hazlitt. An awful lot of people get their ideas from the TV these days. And guess what kind of BS the news tends to spout, in the days of a "Progressive" administration?

        • Re: (Score:2)

          by digsbo ( 1292334 )

          I think you mis-read GP.

          You do? I don't understand why. I think we're in agreement. I wasn't being sarcastic.

          And guess what kind of BS the news tends to spout, in the days of a "Progressive" administration?

          Let me think...Thomas Paine style classical liberalism? No, not that...

          • You do? I don't understand why. I think we're in agreement. I wasn't being sarcastic.

            Yes, I think we are in agreement. I just thought your comment was awkwardly worded.

            Let me think...Thomas Paine style classical liberalism? No, not that...

            Um... just no. The press which follows the current administration (which means most of it) has been spouting pretty much the OPPOSITE of "classical liberalism", which today is called libertarian.

            • Re: (Score:1)

              by digsbo ( 1292334 )

              Yes, I think we are in agreement. I just thought your comment was awkwardly worded.

              Yes, it was.

              Um... just no. The press which follows the current administration (which means most of it) has been spouting pretty much the OPPOSITE of "classical liberalism", which today is called libertarian.

              I know. I was being sarcastic. I'm pretty radically libertarian in my thinking, and was making a joke about the perversion of the meaning of "liberal". I definitely feel the progressives dominate in the "redefine words to make people think you're good" department. So much so that to simply state facts clearly is now a socially punishable offense.

              • I was being sarcastic.

                I guess I missed the sarcasm. I'm usually pretty good at picking up on it, but I slip occasionally.

  • California At It Again (Score:2, Insightful)

    by Anonymous Coward
    They pass a law that gives people warm fuzzy feelings, but doesn't actually DO anything. Who knew?

    • In the months leading up to the beginning of the market's first compliance period, several stakeholders objected to the resource shuffling rules and began agitating for reforms.

      An effective law was passed and the regulated companies neutered the law through lobbying.
      http://en.wikipedia.org/wiki/Regulatory_capture [wikipedia.org]

    • The answer to that is a simple flat carbon tax.

      Lobby all you want, you might even get the rate changed, for next year. But this year's rate is this year's rate. We're all paying it, and bitching about it, and gas is $.50 higher or whatever, and heating oil is higher, and coal gets hit the hardest. Everybody pays the same, because the carbon is taxed at the source.

      Notice the first thing they have to do, is throw out equality under the law. This government created scheme of carbon markets only applies to the

      • The answer to that is a simple flat carbon tax.

        Unless your in australia and the denialist conspiracy theorists get into power howling about the "big new tax" and just scrap it with no replacement.

        • Australian is a net CO2 sink, and the globe hasn't warmed for almost 18 years anyway; so I don't understant your point. Another thing is that conspiracy theorists amongst those you call denialist has been very throughly debunked, in fact 100% of "denialist" agree that man has caused some warming due to CO2 vs. 97% of Warmist agree with that statement! And before you go all conspiracy theorist about "Big Oil/Coal Shills" the CRU [uea.ac.uk] gets considerable funding from evil "Big Oil/Coal".

        • They might, as they might here in the States.

          I might even be in that group; I pay out the ass in taxes now; I don't want new ones.

          Nevertheless, it would still be good law, and if it was worth it, my conservative ass would sign off on it, but political compromises would have to be made.

          What if you traded it for some other tax? Pick an big, unpopular one. I've got a good one... The 35% corporate income tax.

          Heresy? The Republicans would be jizzing their panties for the chance to combat man-made climate change.

  • Seems like it would've worked (Score:4, Informative)

    by Joe Gillian ( 3683399 ) on Friday August 15, 2014 @03:06PM (#47680843)

    The thing is, it seems from the paper like the cap-and-trade system California has works - it's just that other states don't have the same system and thus there isn't much of an impact. It would be interesting to see a group of neighboring states (perhaps New England) try this method and see how it works when they can't meet their emissions goals by offloading their emissions to states that don't have a cap-and-trade policy in place.

    • Re:Seems like it would've worked (Score:4, Informative)

      by MightyYar ( 622222 ) on Friday August 15, 2014 @03:13PM (#47680913)

      Well, here you go! [rggi.org]

      On the surface, it has been quite successful. But you have to remember that most of the reduction has come from natural gas displacing coal - which thanks to fracking would have happened even without the carbon trading.

  • Is it really a problem? (Score:5, Informative)

    by Ichijo ( 607641 ) on Friday August 15, 2014 @03:08PM (#47680857) Journal

    For years, Southern California Edison imported electricity from the Four Corners Power Plant, a coal-fired facility in northwestern New Mexico... [a few months after the carbon market took effect in 2013] the company sold its interest in the coal plant to an Arizona utility (APS, 2013)... this transaction will not reduce net greenhouse gas emissions to the atmosphere. The coal plant will keep emitting pollution just as before--only now it serves customers in Arizona, not California.

    As other states follow California's lead, it will become more and more difficult for coal plants to stay in operation.

    • Re:Is it really a problem? (Score:5, Informative)

      by TubeSteak ( 669689 ) on Friday August 15, 2014 @03:20PM (#47680949) Journal

      As other states follow California's lead, it will become more and more difficult for coal plants to stay in operation.

      The Clean Air Act was passed in 1970.
      Existing coal plants were grandfathered in, with the assumption that they'd eventually be upgraded or replaced.
      Instead, the coal industry has been operating the same dirty plants for >40 years.

      The only reason "it will become more and more difficult for coal plants to stay in operation" is because the EPA has set a date for the closure of this loophole.

      Related reading: The Coal Industry Has Been Fear-Mongering for 40 Years Now [newrepublic.com]

      • plenty of new plants built since 1970, amount of electricity from coal almost tripled, peaking in 2007 but now declining.

        Something has to generate the 39% of electricity that is currently coal powered. Nuclear? Massive trillion dollar plus solar farm in the west?

        • Re:Is it really a problem? (Score:4, Interesting)

          by gurps_npc ( 621217 ) on Friday August 15, 2014 @04:18PM (#47681447) Homepage
          Natural Gas. Process is already under way.

          But nuclear would also work. Massive wind and solar farms are not commercially viable - when compared to natural gas. If you compare them to coal, they sometimes make sense.

          But solar's real benefit is not massive farms, but instead point of use installations in high sunlight areas. This save the transmission wastage (use lose significant amount of power per mile transmitted), which can often just make it viable. The only real thing holding that back is the utilities, as the people that use it often need a utility hookup for times when the sun is not shining, like night time.

          In Florida, the utilities have successfully sued people over installing solar power, but that is beginning to change as the laws were altered to stop them from doing this.

          • In Florida, the utilities have successfully sued people over installing solar power, but that is beginning to change as the laws were altered to stop them from doing this.

            Citation on this?

          • Developing a domestic PV panel industry, fueled by domestic rare earth minerals, would help a lot here.

            • Developing a domestic PV panel industry, fueled by domestic rare earth minerals, would help a lot here.

              You'd still need to process those rare earth metals.
              And (for now) you can't do that without the ore passing through a Chinese owned refinery.

            • Re: (Score:3)

              by dbIII ( 701233 )
              It existed but was killed off by politics to keep oil donors happy. Now it's a bit late to compete with an industry in China that had all of it's technology handed to it on a plate and it's competition removed.

        • plenty of new plants built since 1970, amount of electricity from coal almost tripled, peaking in 2007 but now declining.

          The problem was that the the grandfathering resulted in a situation where running the old dirty nasty power plant was more financially viable than building a new cleaner plant that wasn't quite up to EPA requirements. Another side benefit seen in multiple industries, for example the near death of steel production in the USA is that the older plants, even grandfathered, couldn't compete with newer plants outside of the USA that were, in many cases, operating cleaner than grandfathered US plants but dirtier

      • Re: (Score:3)

        by gtall ( 79522 )

        The EPA and the fact that the gas industry is eating coal's lunch. Coal also has a lot of problem that companies must deal with like fouling streams when one of their coal slurry dams breaks. And getting your gas from a pipeline is a lot cheaper than sending coal via rail cars.

      • Electrostatic precipitators, scrubbers and even bag filters have gone into those things which is why the USA was able to point the finger at the air quality in Beijing without the finger getting pointed back.
        They don't do anything at all to carbon dioxide though.

    • For years, Southern California Edison imported electricity from the Four Corners Power Plant, a coal-fired facility in northwestern New Mexico... [a few months after the carbon market took effect in 2013] the company sold its interest in the coal plant to an Arizona utility (APS, 2013)... this transaction will not reduce net greenhouse gas emissions to the atmosphere. The coal plant will keep emitting pollution just as before--only now it serves customers in Arizona, not California.

      As other states follow California's lead, it will become more and more difficult for coal plants to stay in operation.

      No it wont. Cap and "trade" will never work. They'll just trade their pollution to people less likely to report what they're up to. Remember Carbon Credits? Pay someone in Columbia to plant trees for you? How many of those trees do you think actually got planted? If you want to do something about CO2 output, the feds need to monitor and test power plants CO2 output yearly, then charge a tax for mitigation. You have to pay for CO2 sequestration or other mitigating techniques. The feds then need to hire/pay a

    • And meanwhile, the same Navajo reservation that produces all the coal is also a major source of uranium. US politics being what it is, that gets sold to France while Four Corners gives us smog in the Grand Canyon.

  • Or terrorists, whichever works better for this particular feel-good do-nothing PoS legislation.

  • La la land (Score:2, Insightful)

    by Tailhook ( 98486 )

    CA makes fantasy laws that have to be papered over when the dates arrive. News at 11.

    The ZEV (zero emissions vehicles) mandates they've been backpedaling on for twenty years are another fine example. Physics and CA voters frequently do not agree on reality. When that happens physics wins. Every time.

    • Re: (Score:1)

      by Anonymous Coward

      EVs are possible. And when the naysayers and trolls get out of the way, they happen. And when car makers put electric drive into a cool looking car or practical truck for a real cost, then they will take off. Why can I convert a pickup for $15,000, but it would probably cost $40,000 to buy the same parts in a OEM vehicle?

    • Re: (Score:1)

      by Anonymous Coward

      CA makes fantasy laws that have to be papered over when the dates arrive. News at 11.

      The ZEV (zero emissions vehicles) mandates they've been backpedaling on for twenty years are another fine example. Physics and CA voters frequently do not agree on reality. When that happens physics wins. Every time.

      And yet somehow, I drive my Prius Plugin to BART everyday for two years and have never needed gasoline to do it.
      yes.. pure fantasy.

      • Re: (Score:1)

        by Anonymous Coward

        Hey look, another Prius driver that doesn't realize most of the energy for his battery comes from fossil fuels; CA is 53% Natural Gas powered, and the Rocky mountain and Southwest states that supply your gas burn coal in its place. Yay you.

        • Re: (Score:3, Insightful)

          by Anonymous Coward

          Centralized energy generation (including coal) is arguably cleaner and more efficient, and it's modular... it can be replaced by solar, wind, natural gas, or fusion in the long run.

    • Actually zero emissions makes sense in L.A. (Score:4, Interesting)

      by dbIII ( 701233 ) on Saturday August 16, 2014 @05:22AM (#47683797)
      Actually zero emissions makes sense for many vehicles in Los Angeles, Santiago and other places where the air can be trapped for weeks filling the place up with smog. If you can get the pollution shifted to the top of a smokestack on the other side of a mountain range you win. Of course the sensible thing would be a lot of trains, trams or some other way to move a lot of people about instead of getting the consumers to put up a big capital cost for personal electric vehicles, but that would cut into the cocaine budget or whatever it is that they have Californian legislators on.

  • ...if everyone in the process is at least partially corrupt, undiligent, or just plain out to lunch, and there's no hard accountability designed into the system, no measurement criteria, and no way to balance out abuses on both sides, then the whole things becomes just another talking point that someone can use in an election campaign?

    What's new here? :P

  • False Savings (Score:1)

    by Anonymous Coward

    Common people and engineers know you need real concrete steps and that it will follow almost thru every sector of the economy from home, to work, to government.

    There is no single 'Western Electricity Grid' solution to the issues.

    In the end, probably the only thing that will make huge differences is the reduced amount of Kw/Hrs of electricity used. Given the rise of electric cars, that seems speculative at best.

    More efficient homes and businesses in countless ways seems to be the only way to reduce emission

    • In the end, probably the only thing that will make huge differences is the reduced amount of Kw/Hrs of electricity used. Given the rise of electric cars, that seems speculative at best.

      I once figured out that if you went with the averages for everything in the USA - miles driven, kwh per 100 miles, household electricity usage, number of vehicles per household, and everything else that if we went to 100% electric vehicle usage(getting a Tesla's mileage), each household would use 50% more electricity.

      With the rampant spread of Solar in Hawaii and starting elsewhere I wouldn't be surprised if we saw an inversion in power rates where electricity at night becomes more expensive than during the

      • Hawaii is pretty unique situation, there even if you forget to turn on the "solar water" the temp of you shower is tollerable. When I was there last, it seemed there was no weather reports on TV, I assumed it was because any time the weather was different enough to report it was a news item. Residential heating is unnecessary from what I could see the winter I was there and I doubt A/C would be used even in the summer. I know it snows on Mona Loa on "big Island" but at lower elevation it's always nice.

        • Hawaii is pretty unique situation

          Note that I mentioned that it's rampant in Hawaii, but only starting elsewhere. Hawaii is indeed pretty unique by combining high electricity costs via traditional means with near-ideal weather for solar systems.

          • Re: (Score:2)

            by dbIII ( 701233 )
            I should remind readers that this point that "rampant" in this case is less than 20% of the daytime minimum power consumption in Hawaii. The above poster has a political barrow to push and this usage of "rampant" illustrates that reality is an unwanted impediment to be ignored if it dares to get in the way of that barrow.
      • Ah - Hawaii solar boy! Didn't I debunk your silly example about how the horrible electricity consumers in Hawaii were cheating the electricity company out of their hard earned money by going solar? Oh woe - a former monopoly getting exposed to the cold winds of capitalism and losing money - how terrible.
        Now you've got another bunch of numbers pulled from somewhere. Are you going to pull out another graph from before 1920 just like the last time and pretend your made up number is related to it or is does

  • Legislate that pi is 4 (Score:3, Insightful)

    by raymorris ( 2726007 ) on Friday August 15, 2014 @03:34PM (#47681071) Journal

    > legally binding climate policy in the United States, requiring that California's greenhouse gas emissions return to 1990 levels by the year 2020.

    The passed a law declaring what the total greenhouse gas emissions will be? Is that like the Indiana bill declaring that pi is 4? If they can just pass a law and that'll make it so, why don't they pass a law that in 2020 California's unemployment rate will be as low as Texas, as opposed to more than 50% higher? Passing a law changes the facts, right?

  • Cap & Trade and Carbon Markets are Frauds. They merely shuffle around the money doing little to nothing to really reduce pollution. It's a scam to get rich by the players.

    • I agree. It's far too political. Personally I've always favored a carbon tax as opposed to this 'cap and trade' stuff. Start at current and do a 'dutch auction' for carbon emissions. As such, those with the lowest economic gain from their emissions will exit the market first.

      Allow some trading/credits for true sequestration initiatives, but I figure a tax would have the best effect. Implementation would still be complicated, especially in order to avoid the emissions from simply moving out of the area

    • selling "carbon credits". It's like the Pope selling indulgences.

      He does a world class job of advertising too.

      Of course anyone who could actually predict climate could be a multi-billionaire with ease.

      Instead they apparently sell carbon credits.

      • How do you propose managing a moral hazard and tragedy of the commons that fits within a capitalist market?

  • Fee rather than market (Score:4, Insightful)

    by UltraOne ( 79272 ) on Friday August 15, 2014 @04:11PM (#47681381) Homepage

    The problem described in the OP is one of several reasons why setting a fee for each ton of carbon dioxide emission is a much better idea that a cap-and-trade scheme. There are numerous other reasons, but I will only highlight the most important.

    The entire purpose of either a fee or cap-and-trade scheme is to get carbon consumers to change their behavior (either doing less of things that emit greenhouse gases or by reducing the carbon intensity of the same activities). But almost all the reasonable mitigation measures have long time horizons (years to decades). In cap-and-trade, it is very difficult to predict what the price signal will be at any time in the future. So how can I, as a consumer, decide if it is worth it to buy a more efficient or electric car if there is great uncertainty in how much the carbon control scheme is going to add to my gasoline cost?

    • Re: (Score:2)

      by JBMcB ( 73720 )

      Same goes with the back-asswards CAFE standards. Want more fuel efficient vehicles on the road? Tax gasoline. But no, an insanely complicated average fuel economy-per-vehicle-segment over general fleet sales is imposed. More politically expedient, MUCH less efficient.

  • The big pain in the ass here is that AB32 trickles down to California businesses and state-run entities. Everyone has to do their part to reduce California emissions back to 1990s levels (NOT per capita... raw GHG tonnage per year). That's easy for some, but not so easy for others.

    If your organization was a big time polluter with little employee growth since the 1990s, you can switch to plug-in hybrids for your fleet, swap out incandescent bulbs for fluorescent/LED, put in new thermostats, disallow hot wate

  • California has chased away so much industry I don't see how they can miss.
  • They will succeed in reducing California emissions. It's easy to do when you drive and real industry out. :)
  • "When California’s .. carbon market took effect in 2013 .. A few months later .. [Edison] sold its interest in the coal plant to an Arizona utility .. The coal plant will keep emitting pollution just as before—only now it serves customers in Arizona, not California." ref [sagepub.com]

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