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California Recommits to Carbon Cap-and-Trade

UC Davis research examines the prospects of the program.
California Recommits to Carbon Cap-and-Trade

Cap-and-Trade Renewed to 2030

After nearly a year of debate, California's ambitious and controversial market for carbon was renewed by both houses of the California Legislature late Monday, July 17.  The program, known as Cap-and-Trade, caps Statewide emissions of carbon dioxide and other greenhouse gasses (GHG) through the year 2030.  The cap is enforced through a system of emissions allowances, which are limited by the level of the cap and are tradable amongst firms.  The implications of a renewal of the program are studied in a recent working paper by UC Davis Economics Professor James Bushnell, and his co-authors Severin Borenstein and Frank Wolak.  

Renewal of the program faced headwinds, in part due to resistance from environmental advocates focused on local pollutants.  The prospects for continuing the carbon market grew considerably when legislation renewing carbon trading was coupled with another bill that addressed local pollutants.  As Davis Econ's Bushnell noted in the San Jose Mercury News, “To get to two-thirds, you need a coalition of the people who are really focused on the local pollutants joining the people who are focused on the climate question.”