California Adopts Cap-and-Trade Plan to Combat Climate Change

California regulators, in an unprecedented step, have formally adopted a comprehensive cap-and-trade program to combat climate change by cutting greenhouse-gas emissions.

The unanimous decision by the California Air Resources Board, as the Los Angeles Times reports, will set up the first such state plan in the nation. It will create a complex market system that provides financial incentives for California’s dirtiest industries to reduce heat-trapping pollution.

Under cap-and-trade, companies that keep their emissions under state-imposed limits can sell their excess carbon allowance. Other companies that exeed their limits will be required to buy carbon allowances or invest in “offsets” such as forests managed to contain carbon dioxide.

The program, which takes effect for California’s biggest carbon emitters in 2013, is the centerpiece of AB 32, California’s landmark climate change law that mandates a reduction in carbon pollution to 1990 levels by 2020.

As The New York Times noted, California’s move is a striking contrast to the response to the cap-and-trade concept elsewhere in the U.S. Congress defeated a similar national plan, and a conservative political rebellion against cap-and-trade helped the Republican resurgence in 2010.

Attacking the plan as “cap and tax,” opponents have argued that it would impose excessive expenses on industry and cost the state jobs.

But Mary Nichols, who heads the Air Resources Board, suggested that California could once again take a leadership role in environmental policy and inspire the rest of the country.

“We are staking out new ground in the battle against global warming,” she said. “And we are doing it in difficult times and doing it in a way we believe others will want to follow.”

The climate change rules, years in the making, have survived an oil industry-sponsored ballot initiative intended to block it as well as legal opposition, although the air resources board continues to face a court challenge.


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