California and Quebec Will Link Cap-and-Trade Programs

It's good news for proponents of cap-and-trade programs. The California Air Resources Board (CARB) announced last week that California's cap-and-trade program will be linked to Québec's cap-and-trade program. CARB recently released proposed regulations to link the two programs, and a 45-day public comment period started following the announcement. CARB will consider the proposed regulations at a meeting on June 28, 2012. The proposed regulations ensure that California and Québec permits are interchangeable at auction. The first linked auction is scheduled for November 14, 2012. California adopted its cap-and-trade program in 2010, and designed it to link to other programs. The program is part of its Global Warming Solutions Act of 2006, or AB 32. It covers major sources of greenhouse (GHG) emissions, according to CARB's website, which include refineries, power plants, industrial facilities and transportation fuels. The program's enforceable GHG cap will decline over time. CARB will distribute allowances, or tradeable permits, that will be equal to the emissions allowed under the cap. The program's target is to reduce emissions to 1990 levels by 2020. A press release on the announcement describes Québec's program as "sufficiently advanced" with "equally rigorous reductions and reporting rules as California." Québec is the first Canadian province to develop its own cap-and-trade program in December 2011. The program applies to the largest industrial emitters (about 75 companies), and will include petroleum distributors in 2015. A one-year transition period started on January to help companies transition to the new system which will officially start in 2013. Under the program, emitters are required to either reduce their emissions or buy clean air credits at $10 per ton of greenhouse gases. The program's target is a 20 percent reduction from 1990 levels of GHG emissions by 2020. California has worked with several states and Canadian provinces to develop the Western Climate Initiative (WCI), started in 2007 by California and four other states (Arizona, New Mexico, Oregon and Washington). By 2008, the WCI expanded to four Canadian provinces (British Columbia, Manitoba, Ontario, and Québec). Unfortunately, every state except California pulled out.

"Linking with Québec is a significant advance in California’s efforts to fight climate change and steer our economy toward a clean energy future," said CARB Chairperson, Mary D. Nichols. "Linking provides more options to California businesses and lays the groundwork for other partners to join with us. This sends a strong message to two national governments that now is the time to support innovation, energy efficiency and the development of clean technologies." "Québec is optimistic that its linking with California will be followed by many other partners," said Québec minister for Sustainable Development, Environment and Parks, Pierre Arcand.

The press release points out that the "proposed linkage" is an example of the "wide range of action taking place in the international arena as an increasingly large number of other states and nations are taking steps to fight climate change and reduce greenhouse gases." In 2013, 34 emissions trading programs, including California's and Québec, will start around the world. This includes Norway, Iceland, Switzerland, Australia, New Zealand and 27 European Union members. In 2015, South Korea's program will begin. Last month, Mexico passed climate change legislation. Photo credit: Flickr user, mikebaird