The program in question – called cap and trade – requires companies like oil refineries that emit carbon to buy allowances equivalent to what they plan to emit. Over time, fewer allowances are made available in an effort to incentivize companies to pollute less.
But a recent report by a panel that advises state lawmakers found companies had saved so many pollution credits – 321 million – for later use that it could render the program ineffective. The report’s authors, environmental advocates and some lawmakers have urged the California Air Resources Board to conduct a thorough analysis of the risks posed by the saved allowances.
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But Jared Blumenfeld, secretary of the California Environmental Protection Agency, said Wednesday that is unlikely to happen until late 2023.
“We are looking at this with the attention I think it deserves,” he said. But, he added, “we will not take urgent action to just change things.”
Proponents of cap and trade argue that such market-based climate programs encourage companies to adopt cost-effective emission reductions. But opponents say cap and trade simply allows companies to continue polluting with little relief for nearby communities.
California’s program was launched in 2013 and was set to expire in 2020. But lawmakers extended it to 2030 five years ago, with some changes, including reducing the total number of allowances that would be sold in future auction.
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Some lawmakers wanted the Air Board to eliminate all unused allowances, forcing companies to start fresh rather than rely on cheaper allowances they purchased in the past. But that didn’t happen. Instead, the state has said all allowances that do not sell for 24 months will be removed from the auction.
Neither the state nor experts studying the market say they know exactly how big the allowance bank can be without causing problems. But the air board has so far only measured the possibility of a bank of about 150 million credits – less than half the amount that exists today.
Any changes to the amount of allowances available on the market would have to go through a regulatory process or be ordered by the Legislative Assembly. Several participants in Wednesday’s hearing raised concerns that waiting until 2023 to analyze the benefits bank’s risks could delay changes to the program until at least the middle of the decade.
“Waiting until the mid-2020s could make it harder for the state to make adjustments in time to meet its 2030 goals,” warned Ross Brown of the Office of the Legislative Analyst, which advises lawmakers on issues. fiscal and political.
California has set the requirement to reduce statewide greenhouse gas emissions by 40% below 1990 levels by 2030. Previous estimates from 2017 indicated that more than one third of these reductions should come from cap and trade.
The role of cap and trade is likely to be diminished in the new “scoping plan” the air board is drafting, which lays out a roadmap for how the state will achieve its climate goals.
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Blumenfeld, the EPA secretary, said an analysis of saved allowances can only take place after this plan is complete. State Sen. Bob Wieckowski, who chaired the legislative hearing, noted that people have been worried about the amount of credit saved for years and the problem is not new.
“Aren’t you afraid of waiting too long?” He asked.
Liane Randolph, chair of the air board, said the state needs more time to see how recent changes to the program are working. She also suggested that the scoping plan could assume that cap and trade will be extended beyond 2030, although there has been no legislative effort to do so.
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