Post-2020 cap-and-trade workshop

Near Zero comment letter to the California Air Resources Board re: oversupply, banking rules, and offsets issues in the preliminary discussion draft cap-and-trade regulations (Mar. 16, 2018) (with Mason Inman and Michael Mastrandrea) (PDF).

At a workshop earlier this month, CARB released its initial thinking on how to implement the post-2020 market design reforms required by AB 398 and invited comments on these materials. In response, we comment on CARB’s overall market design proposal and proposed interpretation of AB 398 offsets limits, focusing on the following five issues:

  1. Pursuant to AB 398, CARB still needs to evaluate market oversupply conditions and allowance banking regulations.

  2. Rather than dispute the cause of market oversupply, CARB should consider how to develop a post-2020 market design that manages a transition from today’s low prices to the higher prices that are likely needed to achieve California’s 2030 target.

  3. CARB needs to indicate how its proposed post-2020 offset limits are consistent with the legislative intent in AB 398.

  4. CARB should exclude consideration of greenhouse gas emissions from its proposed bottom-up determination of an offset project’s “direct environmental benefits.”

  5. CARB needs to show how its proposed market design is consistent with the role the Board identified for cap-and-trade in the final 2017 Scoping Plan.

To read the full comment letter, please download the full PDF comment letter.

We also analyze these issues more extensively in two Near Zero Research Notes, on market design here and offsets here; the Research Notes are attached to the comment letter.