Abby L. Harvey
GHG Monitor
1/16/2015
At the close of the second year of California’s cap-and-trade program, the effects of the program have been largely positive, disproving claims made by opponents of the program at its onset, according to Katherine Hsia-Kiung, lead author of a new report from the Environmental Defense Fund. In remarks this week, Hsia-Kiung said that since the program began the economy of California has grown while emissions have decreased. “Contrary to what some opponents of the program once predicted, the economy has been able to grow and thrive since the implementation of the program. For instance, in 2013 California moved from 9th to 8th largest economy in the world and outpaced the rest of the nation 3.3 percent to 2.5 percent in job growth in the first year and half of the program, adding more jobs than any other state since 2010. What’s more, studies show that this trend is expected to continue into 2015. In addition, California is showing that you don’t need emissions growth to get economic growth,” she said.
The new EDF report also finds that since the program launched under the Global Warming Solutions Act, commonly referred to as AB 32, venture capital investments in clean technology have increased drastically. “Since 2006, when AB 32 was signed into law, California has received $21 billion in clean technology venture capital investment, more than all the other states combined. The suite of California’s groundbreaking policies—including mandates on cleaner energy, fuels, cars, and buildings—has helped venture capital investment become more diverse and more evenly spread across multiple segments in 2013 compared to previous years, according to Next 10, a non-partisan, non-profit organization,” the report says, also noting that the sum of such investment in all other states combined totaled $19 billion. “It’s clear that California’s policies are catalyzing a transition to clean economy that is creating jobs, improving the health of the state and benefiting the environment,” Hsia-Kiung said.
Carbon Market Remains Strong
The carbon market developed in California has matured and is strong, Hsia-Kiung said. “All metrics over the past year have reflected a strong market that is only growing healthier and more robust, every quarter. … Allowances are sold to companies through auctions and the results of the four auctions of 2014 showed healthy demand and stable prices,” she said. Market activity is further broken down in the report. “An average of 72 ‘qualified bidders’ registered for each of the three California only auctions in 2014, a slight decrease from the first five auctions, which had 80 registered bidders on average. Across all eight California-only auctions, 157 unique companies have registered to participate in at least one, showing that a large group of companies are becoming familiar with the auction process and are planning to use the auctions to help fulfill their compliance obligations,” according to the report.
Further, the report suggests that covered companies take the program seriously. In November of last year, covered companies were required to surrender allowances for the first time in the program, “to demonstrate compliance with the cap-and-trade program,” the report says. Companies were given a Nov. 3 deadline to surrender enough allowances to cover 30 percent of their 2013 emissions. “[The California Air Resources Board] reports that 100 [percent] of regulated companies met their requirement, a significant milestone demonstrating that entities are committed to complying with the program and are aware of what is expected of them moving forward,” according to the report.
