California approves first US carbon-trading scheme
As is often the case, California will once again lead the way, or as some might put it, become a testing ground for new legislation, in this case, cap and trade.
The success or failure of the European efforts of cap and trade remains uncertain, with valid arguments on both sides. Now in the United States, the modal will be tested, with the hope of cutting emissions and providing a scalable modal of cap and trade that the rest of the country could utilize.
California has become the first US state to approve a carbon-trading plan aimed at cutting greenhouse emissions.
State regulators passed a “cap-and-trade” framework to let companies buy and sell permits, giving them an incentive to emit fewer gases.
The aim is to create the second-largest market in the field, after Europe’s.
State officials hope the scheme will be copied across the US, but opponents warn it may harm California’s growth and lead to higher electricity prices.
The new rules – part of a wider state climate bill passed in 2006 – mean that from 2012 California will allocate licences to pollute and create a market where they can be traded.
A company that emits fewer greenhouse gases than its permits allow, could sell the extra capacity to a dirtier firm.
By making over-polluting more expensive, the scheme aims to provide incentives to develop greener technology.
Over time the total amount of greenhouse gas emissions – the cap – is to be reduced. California wants to cut emissions to 1990 levels by 2020.