On Tuesday, California Governor Jerry Brown signed a bill that extended California’s cap-and-trade policy into 2030. Arnold Schwarzenegger originally introduced cap-and-trade to California in 2006 with California’s Global Warming Solutions Act (AB32), which was set to expire in 2020. Governor Brown has allowed the bill to live on for another decade, and it’s expected that carbon dioxide emissions in California will be down from 1990 levels by 40% by then.
Cap-and-trade approaches the task of lowering emissions by creating economic incentives for companies to lower their output of carbon dioxide (and other harmful pollutants). The caps are scientific limits placed on how much of a pollutant can be released into the atmosphere. This number is then split up into allowances that are given to companies and power plants. In the case of carbon dioxide, each allowance is about one ton, but these allowances will decline over time as the cap does. Additionally, companies who exceed their allowance will be fined.
Companies that already have low emissions can sell their allotted ton of emissions, creating a new marketable product: carbon dioxide allowances. The ability to sell allowances and the fine for companies who exceed their allowances create a monetary incentive for companies to lower their carbon dioxide emissions faster.
The cap-and-trade program has already seen successful in helping solve the acid rain problem by reducing sulfur emissions. The amounts of sulfur dioxide in the atmosphere were too high and were consequentially causing acid rain and snow. The Environmental Defense Fund, which pens environmental policy, created a cap-and-trade program to be included in the 1990 Clean Air Act, stating that sulfur emissions must be cut to half. Not only was this goal achieved, it was achieved at a faster rate than projected and at ¼ of the projected cost.
The signing ceremony to extend AB32 took place at Treasure Island, the same venue that Arnold Schwarzenegger signed AB32 more than a decade ago. At the signing ceremony, Brown explained, “If we don’t do something, it’s the end of the world as we know it.”
Schwarzenegger also attended the signing ceremony and vocalized the importance of continued support for environmental legislation, saying, “there’s only one man who dropped out” of the Paris Accord. “America did not drop out.”
With this program in place, California will continue to lead the fight against global warming for the United States, and many hope that other states follow suit and introduce similar policies.
