California Cap and Trade scores big marketplace wins

by Silvio Marcacci.

Painted California flag
Painted California flag image via Shutterstock.

California’s cap and trade market will expand in 2014 after a successful first year of operations that quelled fears of a European Union-style carbon allowance glut while powering a clean energy economic boom.

The California Air Resources Board (CARB) announced a minimum of 81 million 2014 allowances and 37 million 2017 allowances will be auctioned during 2014, and the minimum reserve price for allowances will be set at $11.34.

2014’s available allowances and minimum reserve price are both increases over this year, when 57 million available 2013 allowances sold at a minimum reserve price of $10.71. But beyond increasing the number and cost of permits, several other developments suggest California’s carbon market will have an even more successful second year of operation.

Carbon Market Success In 2013 Leads Into 2014

Before looking ahead to 2014, it’s worth recapping exactly how the state’s carbon market performed in 2013. CARB held the system’s fourth quarterly 2013 auction last month, selling over 16 million 2013 allowances at $11.48 and over 9 million 2016 allowances at $11.10.

Three positive angles stick out from these auction results. First, all available 2013 allowances sold during the auction while nearly two bids were received for every one available allowance, meaning strong demand exists among bidders. While the November auction’s allowance price was the lowest of the four auctions held this year, it was still significantly higher than the minimum reserve.

Second, all future allowances sold out for the second auction in a row, at the highest clearing price yet for future vintage allowances. With demand and prices rising, California’s carbon market also shows strong future interest from bidders and stabilizes the system moving forward.

Third, the carbon allowance auctions continued to plow revenue into the state’s clean energy economy. $1.4 billion in total auction revenue has been raised, with more than $530 million dedicated to cutting emissions or funding renewables, including $130 million for clean energy projects in low-income communities.

Market Developments Allay Instability Fears

Just like with any start-up, California’s cap and trade system experienced a few growing pains in 2013, but two new developments should allay fears of market instability.

To start, California’s Superior Court ruled the system is within its legal authority to use auctions as a mechanism to sell allowances into the market. The decision dismissed a lawsuit by polluters who argued all permits should be distributed for free. While the ruling may be challenged, it does set a reassuring precedent.

California Carbon Dashboard
California Carbon Dashboard image via CalCarbonDash.org.

In addition to legal authority, daily system interactions should become much clearer thanks to the California Carbon Dashboard, an online resource created to track carbon prices and system news. The website also aggregates CARB announcements, emissions levels by sector, and system interaction with other state policies to provide market participants the clearest possible picture.

Biggest Impact Could Come Outside California

But California cap and trade’s 2014 fortunes won’t only be made internally. The system’s biggest gains will most likely come through linkages to other global carbon markets, and could ultimately make it the center of the world’s second international cap and trade system.

On January 1, 2014, California will formally link its system with Quebec’s nascent cap and trade system. This move will establish North America’s first international carbon market and allow market participants to trade allowances and offset credits across both jurisdictions. By 2020, the linkage is expected to generate at least $2.5 billion for clean energy in Quebec.

California also recently signed a formal agreement to link its climate policies with British Columbia, Oregon, and Washington. Under the plan, California will maintain its cap and trade system while British Columbia keeps its carbon tax. Together, they’ll link where possible, and coordinate with carbon markets being considered in Oregon and Washington.

The state also now has a formal relationship with China to work together on cutting emissions by designing and implementing synchronized carbon trading systems. China is in the middle of launching seven regional carbon markets that once fully operational, will be the largest in the world.

California Cap And Trade: Key To Climate Victory?

As international carbon markets start to develop around the world, California’s success is becoming a model for emulation that could transform the state from the epicenter of America’s clean tech market to the centerpiece of the fight against climate change.

We’re fast approaching the world’s carbon budget, but considering carbon markets cut emissions 17 times cheaper than subsidies, California cap and trade may just hold the key to climate victory.

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This article, California Cap And Trade Expanding In 2014 After Successful 2013, is syndicated from Clean Technica and is posted here with permission.

About the Author

Silvio MarcacciSilvio Marcacci Silvio is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.

California High-Speed Rail To Have Net Zero Emissions

By Guest Contributor – Roy L Hales

This article was first published on San Diego Loves Green
By Roy L Hales

california high speed rail

Construction on the first 65 miles of California’s high-speed rail project is about to beginThat is despite a new bill from Congress’ transportation committee, which has blocked funding in 2014. The Republican-controlled House was too slow, they already provided $3.5 billion and the money cannot be taken back. Now the California’s High Speed Rail Authority has released a report stating the project will produce zero net greenhouse gas emissions.

“Our commitment is to make positive environmental contributions from day one.” — Authority CEO Jeff Morales

This does not allay concerns about the impact this project would have on 11 endangered species along the route, but does address the problem of air pollution from the diesel machinery that will lay down the tracks.

“High-speed rail will transform the state’s transportation system while reducing greenhouse gas emissions and providing environmental benefits for years to come.” — Jeff Morales

The CO2 produced during construction is to be offset by a tree planting program. Only recycled concrete and steel is to be used and contractors will be required to divert 75 % of their non-hazardous waste from landfills.

“The contractors will also be directed to explore methods to reduce the amount of potable water used onsite. These practical activities, including anti-idling programs, water efficiency, energy efficiency, and the use of fuel-efficient vehicles are among those that have been proven effective for reducing both GHG emissions and costs on many infrastructure projects.” — Jeff Morales.

The system is to run on 100% clean energy.

“To estimate GHG emissions associated with the electricity purchased by the Authority for traction power, which is the power needed to propel the train along the rails, and facilities operations, the Authority assumed a mix of 20 percent solar, 30 percent wind, 45 percent geothermal, and 5 percent biogas (methane capture).” Jeff Morales.

Thus the GHG emission reduction is calculated in terms of the number of passengers that choose to ride the high-speed rail system rather than use a car or airplane.

The Report’s Summary of Findings
The Report’s Summary of Findings.

“This analysis of greenhouse gas reductions clearly demonstrates that the high-speed rail project is an integral part of California’s overall climate goals,” said California Air Resources Board Chairman Mary Nichols. “This project will serve in the near term as the backbone of a more sustainable growth strategy in the San Joaquin Valley, and over time will provide a climate-friendly transportation option linking southern and northern California.”

“This report details important steps that the High-Speed Rail Authority is taking to curb greenhouse gas emissions in California and embrace renewable energy during operations,” said Brian Kelly, Secretary of the California State Transportation Agency. “High-speed rail is a key part of meeting the state’s mobility, safety and sustainability objectives.”

In Europe, where high-speed rail systems have been is use for decades, they also have a track record of stimulating local economies.

“Lille diversified into knowledge-intensive, service-producing activities once it was connected via high speed rail to London, Paris and Brussels. High-speed rail investment helped the city turnaround from depopulation and declining economic sectors. After being connected to high-speed rail in 1981, Nantes has evolved from an industrial port to a major service sector hub and one of the world’s most livable cities.”

California high speed rail map complete

If the high-speed rail system proceeds according to plan, by 2029 it will connect San Francisco to Los Angeles. The cost for this first phase of construction is estimated at $68 billion. Phase two, which will extend the system to cover the 800 miles between Sacramento and San Diego, is to come later.

Yet there may be opposition in the Republican dominated House, which has just axed the funding for a similar project connecting Las Vegas to California.

“At a certain point, they have made it very clear that they are going to need $38 billion in federal funds,” said Jeff Denham, Chairman of the House Railway Committee.“

(Read “San Diego and the hoped for Resurgence of passenger trains“)

Graphs and images taken from the California High Speed Rail Authority Report, Contribution of the High-Speed Rail Program to Reducing California’s Greenhouse Gas Emission Levels (June 2013).