As of January 1, 2013, the cap-and-trade portion of California's Global Warming Solutions Act, AB 32, went into effect. Over 300 major polluters in California will face emissions reductions obligations, and in 2015, the program’s size will double to include transportation fuels and natural gas. These companies were given an allowance as to how much carbon pollution they can dump into the atmosphere. They can buy aditional "allowances" from the state which held its first sale November 2012. There are more auctions scheduled. Eventually companies will be able to trade allowances among themselves. So a company that emits less CO2 than they are allowed to can sell the remaining portion of its allowance to a company that exceeds its allowance. As years go by, the allowances will be reduced thus reaching California's goal to cut its greenhouse gas (GHG) emissions back to 1990 levels by 2020. A secondary function of cap-and-trade is to bring additional revenue into state coffers from selling the allowances. However, California's first auction brought in a less than expected amount. It was hoped that the money made from selling allowances would help to alleviate state budget problems.
California is establishing a model that could be used by other states. "Our overall impact is small," said Mary Nichols, chairwoman of the California Air Resources Board (CARB), the agency implementing the program. "What we do will not solve the problem. But we want to demonstrate that this type of system can work." California is the largest economy in the nation and the eighth largest in the world so the success of cap and trade here could pave the way for other states and nations.
Major industries such as oil and coal campaigned against the law limiting California carbon emissions. Fossil-fuel and manufacturing industries have problems with the cap-and-trade law. They say that, if the California model fails, it will cement their case that serious climate policy is economically untenable. The goal from CARB's point of view is to lower carbon pollution without hampering economic activity. “We see the grand experiment going on out in California as informing the rest of the country,” says Stephen Brown, a lobbyist for Tesoro. “The concern is that elements of this will start popping up in different states. The other 49 states will see if California is the canary in the coal mine.”
According to the National Journal:
"Meanwhile, the creation of a major financial market for buying and selling pollution permits will have a big impact—not just on global warming, but on the global financial market to price and trade carbon pollution. About 20 percent of the world’s economies already have carbon-pricing or cap-and-trade laws in place—including the European Union, Australia, New Zealand, South Korea, and the province of Quebec. China is moving forward on a plan to implement cap-and-trade programs in some of its provinces. California is already planning to link its carbon trading with Quebec, and talks are beginning about also linking to Australia’s market, creating a truly global market—one that could make billions of dollars for its participants, or come crashing down if any of its members fail.
"California’s environmental officials are aware of the scrutiny their program will face. In the years leading up to implementation of the law, the state worked closely with the European Union, for example, to learn from mistakes made in its cap-and-trade program, which has come under criticism for allowing the price of carbon permits to sink too low—meaning that the program, in some years, has done little to actually cut pollution. “We learned what not to do from the E.U. We looked at their program, consulted with them, and made adjustments based on their experiences,” said Dave Clegern, a spokesman for the California Air Resources Board, the agency that will run the program."
Mary Nichols is known as the Queen of Green. She's the pre- eminent environ- mental regulator of a generation. As the Chairwoman of CARB, she is shaping environ- mental policy for the rest of the world. Cap-and-trade is only one example. The advanced clean cars program is another. In a state with 31 million cars, CARB spends a lot of time worrying about what comes out of those tailpipes. CARB pioneered unleaded gas, the catalytic converter and smog checks. As a result, LA smog has been reduced to a fraction of what it once was. The rest of the nation has followed California.
The Global Warming Solutions Act of 2006, passed by the California legislature and signed into law by Governor Arnold Schwarzenegger, required the state to cut GHG emissions by 25% by 2020. It has several provisions. All fuel sold in the state would eventually have to reduce the carbon footprint by 10%. A certain portion of electricity sold in the state would have to come from clean energy. By 2025 there will have to be 1.4 million electric and hybrid cars on California roadways, and one out of every seven cars sold in the state will have to have zero tailpipe emissions.
The cap-and-trade program is the first in the US and is not without controversy. Texas oil companies funded a ballot proposition to overturn the Global Warming law. Seven ethanol producing states sued CARB claiming the law would hurt their industry.
Mary Nichols' arch enemy, San Diego County's own Darrell Issa, R-Vista, has launched an investigation. He sent CARB Chair Mary Nichols a 13-page letter advising her that he was "expanding" the committee's ongoing investigation into the establishment of fuel economy standards. Nichols had earlier declined to attend a committee hearing on the subject. "Your refusal to subject yourself and your office to congressional scrutiny is emblematic of the core concern that many in Congress share ... that CARB, as a state actor, is unresponsive to congressional concerns and unappreciative of congressional priorities," Issa wrote. He accused CARB of bullying the auto industry, lacking transparency and using CARB's power to help set national energy policy.
Mary Nichols says, "If you don't create a stable regulatory environment, what you get is a race to the bottom where you get companies competing with each other for who can do things the cheapest and the dirtiest and that's bad for society as a whole." In a Dan Rather report, Rather stated "Nichols says that CARB is helping create a California poised for the future, that regulations rather than stymying economic growth, are setting the foundation for industries that will thrive in a new energy world..."
Al Gore has a new book out: "The Future." America's primary environmental activist says that there are 90 million tons per day of GHG emissions into the environment, "as if it's an open sewer". These GHGs trap enough extra energy every day to equal the amount in 400,000 Hiroshima atomic bombs. That's what is evaporating much more water off the oceans and filling the sky with a lot more water vapor. These great basins of water vapor in the sky are now full to overflowing so you get huge downpours. Recently in Australia more than 53 inches of rain fell in three days in some areas. All over the world these events are occurring with regularity. On Fareed Zakaria GPS Gore said, "If you look at recent satellite pictures you see a new huge ball of light as large as Chicago in rural North Dakota due to flaring of methane from the fracking wells. Methane is 70 times as powerful as CO2 in terms of global warming. Methane leakage may now be occurring in sufficient quantities to outweigh the global warming advantages of switching from coal to gas."
CARB was established in 1967 when Governor Ronald Reagan signed the Mulford-Carrell Act. CARB is a department within the California Environmental Protection Agency. California is the only state that is permitted to have such a regulatory agency, since it is the only state that had one before the passage of the Federal Clean Air Act. Other states are permitted to follow CARB standards, or use the Federal ones, but not set their own. Because California is exempt from following Federal regulatory standards on the environment, it is in a position to lead the world in that regard. Since Federal standards are by and large set by hidebound Republicans who will do everything possible to cater to the fossil fuel producing industries and fight against any regulatory standards, the Federal government is not in a position to do much about global warming despite President Obama's mentioning it in his Inaugural address. That is why California is the leader and trendsetter when it comes to the environment in the US and even in the world.