With the U.S. Senate unlikely to take up global warming legislation before the mid-term elections, national attention is shifting back to the states, where efforts to curb greenhouse gas (“GHG”) emissions are already underway. States and regional partnerships were some of the earliest architects of domestic climate programs, prodding the federal government and offering a model for national policy. Today, however, many of these state programs are facing new threats of their own.
As described in a September 16 New York Times article, a proposal on the ballot in California this November would suspend implementation of the state’s 2006 Global Warming Act (“AB 32”), which requires the reduction of state-wide GHG emissions to 1990 levels by 2020. In 2008, California outlined a series of policies that would achieve that goal – including existing vehicle greenhouse gas controls, a strengthened renewable electricity mandate and a new cap-and-trade program. But the pending ballot initiative (“Proposition 23”) would suspend the climate law until California’s unemployment rate falls to or below 5.5% for four consecutive quarters, a far cry from the state’s current rate of over 12% unemployment.
The suspension of AB32 could threaten the progress of the Western Climate Initiative (“WCI”), collaboration between seven Western states and four Canadian provinces to reduce their collective greenhouse gas emissions to 15 percent below 2005 levels by 2020. While WCI members planned to launch a regional GHG trading program by 2012, its success rests heavily on California; a recent analysis from Barclays PLC warned that the regional program’s future “will fully depend on the outcome of … Proposition 23.” Over the last year, two members of the WCI (Utah and Arizona) have announced their plans not to participate in the trading scheme.
The New York State Assembly has twice passed a bill to cap and reduce statewide GHG emissions, though the State Senate has yet to take up the legislation. New York remains an active participant in the Regional Greenhouse Gas Initiative (“RGGI”), which recently celebrated its second anniversary with its ninth auction of GHG emissions allowances. A fully functional carbon dioxide trading program covering power plants in 10 Northeastern and Mid-Atlantic states, RGGI has been held up as a model for national legislation, and market monitors have praised its “fair and transparent” auction process.
RGGI’s latest clearing price for a ton of carbon dioxide was just $1.76, however, roughly 1/10 of the price of GHG permits in European trading. The low price is due to a combination of lower than expected energy demand and RGGI’s modest emissions reduction targets. Moreover, in response to growing budget deficits, New York and New Jersey both diverted RGGI auction proceeds that had been earmarked for clean energy projects to fund general budgetary purposes.
While RGGI moves forward, supporters and opponents of global warming legislation are looking to the California ballot initiative as a bellwether for state climate programs nationwide, and perhaps federal policy as well.