Cap And Trade - Blog Posts

California's climate change law (AB 32), which puts a price on carbon emissions and creates a cap-and-trade system to reduce greenhouse gas emissions, is yielding substantial reductions in emissions from oil refineries. These refineries are a major source of carbon emissions, along with a host of other toxic chemicals like ammonia, lead, benzene, mercury and acid gases.

Data from the California Air Resources Board shows that 11 refineries substantially reduced emissions between 2010 and 2011, in addition to cuts in the release of other toxic pollutants. Evidence shows that these reductions not a result of cuts in production, but to refineries investing in and upgrading equipment in response to AB 32. An example is Valero’s refinery in Benicia, CA, which decreased covered emissions by over 95,000 metric tons, while also cutting ammonia emissions by 98%, sulfuric acid by 84%, and benzene by 49%, through the installation of a new flue gas scrubber.

The Regional Greenhouse Gas Initiative (RGGI) is a cap and trade program involving nine northeastern states:  Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. New Jersey was a part of the program but Gov. Christie pulled the state out of the agreement in 2011. The purpose of the program is to lower emissions from power plants in the northeast. On its face, carbon emissions have declined from 188 million tons of carbon-dioxide in 2005 to 91 million tons in 2012. However, much of that is due to the recession and cheap natural gas replacing dirty coal. At present, power plants emit less carbon than the current cap. This gives little incentive for them to invest in energy efficiency and renewable energy.

In an effort to further drive investment in efficiency and renewables, the RGGI released a proposal to progressively lower the emissions cap through 2020. The 2020 cap will be 14% below the current level of emissions.

Brad Plumer of the Washington Posts notes that "Between now and 2020, the new RGGI scheme is hoping to cut annual emissions by about 13 million tons. That’s about 0.06 of all power plant emissions in the United States last year. A rounding error. Ultimately, RGGI might best be thought of less as a solution to climate change and more of a revenue-raiser for the Northeast. It’s also an experiment of sorts — a way for policymakers to figure out what works and what doesn’t in climate policy." 

Another graph from Theda Skocpol's analysis of why the 2009 Cap and Trade bill failed, this one looking at increasing political polarization between the Democrats and the GOP from the 1970s on.

*The LCV (League of Conservation Voters) average reflects LCV scores given to lawmwakers, which are based on their votes on important environmental legislation. The higher the score the more "pro-environment" the lawmaker.

Harvard political scientist Theda Skocpcol analyzed the failure of the 2009 Cap & Trade bill to determine what caused climate legislation to fail while health care reform succeeded. In her report, she claims that a major failure was that the environmental coalition focused on gaining republican support (which was reasonable, as Republicans had previously supported cap and trade, including 2008 Republican Presidential nominee John McCain), without recognizing that the environment had become a politically polarized issue, with Republicans turning against environmental legislation.

In an interview with The Washington Post's Brad Plumer, she states:

One of the things that really surprised me in my research came from pulling together scores from the [League of Conservation Voters]. And you see a clear pull on politicians from grassroots conservative opinion around 2006 and 2007. Climate-change denial had been an elite industry for a long time, but it finally penetrated down to conservative Republican identified voters around this time. That created new pressures on Republican officeholders and candidates. And I don’t think most people noticed that at the time. Even John McCain. I have this figure that shows him moving up on LCV scores for most of the last decade [i.e., casting more pro-environmental votes] and then pulling back suddenly to the lowest level starting in 2007.

Based on a survey of 144 climate change economists performed by the Institute for Policy Integrity at the New York University School of Law, response to: "Placing a “price on carbon” through a tax or cap‐and‐trade system will increase incentives for energy efficiency and the development of lower carbon energy production."

Other interesting results:

84% agreed or strongly agreed that “the environmental effects of greenhouse gas emissions... create significant risks to important sectors of the United States and global economies.”

91.6% preferred or strongly preferred “market‐based mechanisms, such as a carbon tax or cap‐and‐trade system” over command‐and‐control regulation to reduce greenhouse gas emissions.