Due to continuing legal battles, California regulators have decided to delay enforcement of the state’s carbon-trading program until 2013.
The program is scheduled to take effect January 1, but in May a Superior Court judge halted progress on the program, saying the California Air Resources Board (CARB) had failed to properly consider other strategies for reducing greenhouse gas emissions as required by state law.
Last week, a state appellate court ruled CARB could continue preparations to launch the program while awaiting further legal decisions. CARB is challenging the Superior Court’s ruling, because they did include alternative strategies such as carbon taxes – which were ruled out because they were deemed unrealistic politically – in the initial program analysis.
At this point, CARB Chairwoman Mary Nichols says regulators need additional time for "all necessary elements to be in place and fully functional."
The postonement doesn’t change the program structure and Nichols told a state Senate committee that companies required to participate in the program will still be required to draw down their emissions by 2020.
So, even though enforcement won’t begin until 2013, the 600 industrial facilities affected by the program would be smart to begin implementing reduction strategies right away.
"This is still a green light on cap-and-trade. The program still begins in 2012, but regulated entities would not need to prove compliance until 2013. It is like giving students more days to turn in their homework for the year," Ricardo Bayon, a carbon-market expert with San Francisco-based EKO Asset Management Partners, told the Los Angeles Times.
California’s carbon market is expected to be the largest in the US when it launches. Projections suggest it will handle $10 billion in carbon allowances by 2016.
"The one-year period will allow us to road test market mechanisms to see how they work while ensuring that the greenhouse gas pollution reductions required by the program remain intact. By getting this right, California can serve as a model for other states and countries," State Sen. Fran Pavley told the Times.
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