The First Cap and Trade for Carbon Emissions (Almost)

The following is part of a series by our friends at CSRHub (a 3p sponsor) - offering free sustainability and corporate social responsibility ratings on over 5,000 of the world’s largest publicly traded companies. 3p readers get 40% off CSRHub's professional subscriptions with promo code “TP40“. By Carol Pierson Holding Too bad for California. State voters passed the most ambitious climate bill in the country, AB32, which mandates emissions reductions to below 1990 levels—not up to Kyoto levels, but still the best in the U.S.—and also implements a cap and trade program for carbon emissions. Voters then reinforced their support when they voted down a bill sponsored by two big oil refinery companies (check out their environmental ratings here — Tesoro and Valero). That bill would have disingenuously tied reducing emissions to employment, by delaying implementation until the state’s unemployment dropped to 5.5%...for four consecutive quarters. Voters could not have been more clear. But the California Superior Court differed. Last month, San Francisco Judge Ernest Goldsmith ruled in favor of delaying the cap and trade portion of the bill. His rationale: that the California Air Resources Board violated state environmental law by failing to properly study alternatives such as a tax on emissions, a solution that is clearly economically and politically infeasible. The irony is that the group that petitioned the court to delay cap and trade are environmental activists represented by The Center on Race, Poverty and the Environment. And I can see their argument: why not use this legislation to bring awareness to the disproportionately high levels of pollution in lower income neighborhoods? What I can’t see is why Judge Goldsmith is concurring. Or, for that matter, why anybody is against cap and trade. I posed this question last night to a die-hard conservative capitalist who dismissed cap and trade as “collectivism,” which makes about as much sense as his argument against climate change: “The scientists who support the idea are all making a living on research grants to prove it exists,” an idea he claims he picked up from the Wall Street Journal editorial pages. And you know those Journal readers, nothing will change their minds—not even the facts. The facts are that we tried cap and trade in the 1990s to reduce acid rain and it worked so well that even that bastion of capitalism, The Economist, crowned it "probably the greatest green success story of the past decade” in 2002. The Environmental Defense Fund did the analysis: 100% compliance among refrigeration and aerosol manufacturers. Power plants jumped in too, taking advantage of the allowance banking provision to reduce SO2 emissions 22 percent below mandated levels. And the cost of the program was less than one-fifth of projections. Ironically, the leader of the ozone trend-analysis team Professor Michael Newchurch cautioned that the ozone layer would not be out of danger until we addressed the lower stratosphere as well, where 80% of the ozone exists…and is being destroyed by greenhouse gases. I give up.

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Carol Pierson Holding is a writer and an environmentalist; her articles on CSR can be found on her website. Inset photo, Creative Commons courtesy of docentjoyce. Inset chart, "The Cap and Trade Success Story," courtesy of the Environmental Defense Fund.