Thanks to E&E reporter Debra Kahn for featuring me in two great stories on the California Air Resources Board's draft proposal to extend cap-and-trade beyond its current expiration at the end of 2020. E&E's wire services are the best way to follow key developments in state and federal energy and climate policy.
CALIFORNIA: Under pressure, state to propose cap-and-trade changes
Debra Kahn (July 11, 2016):
Observers say the California Air Resources Board's (ARB) proposal to "revise the requirements for unsold allowances and vintages available in the current auction" could increase demand for copious supplies that are currently causing low demand at state-run auctions (ClimateWire, May 27). One way to increase demand for the allowances could be to allow them to be used in the post-2020 trading period.
"The solution to pollution is dilution," said Danny Cullenward, a research associate at the Carnegie Institution for Science. However, he said, tweaking market rules could hurt perceptions of the program's environmental integrity. "If pre-2020 allowances can be used after 2020, we'd be solving the short-term oversupply problem at the expense of post-2020 market integrity."
CALIFORNIA: State releases plan to extend cap and trade through 2050
Debra Kahn (July 14, 2016):
"If you believe this system is credible, you should buy allowances at today's low prices and hold them for the post-2020 period," said Danny Cullenward, a research associate at the Carnegie Institution for Science who questions ARB's post-2020 legal footing. "Otherwise, you'll have to buy them back at a much higher price later."
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Cullenward pointed out that legal questions about the program's post-2020 status should also apply to ARB's submission to U.S. EPA. If cap and trade is not legal, then EPA should not accept it as a compliance plan, he said, even if California's emissions are projected to be well below the federal cap for 2030.
"With this legal uncertainty in the state, it'll be an interesting question to say to the federal government, 'Don't worry about that; we've got that taken care of,'" he said.