An article in today's NYTimes wonders what's up with climate federalism? in the context of California's cap-and-trade experiment:
California’s climate change law, passed in 2006, was once seen as a beta test for a national push to limit greenhouse gases. Cast as a market-driven strategy that was preferable to a tax, cap and trade drew considerable bipartisan support before the nation’s political landscape shifted, climate legislation fizzled in Congress and the economic model became a focus of derision for ascendant Republican conservatives.
Will California keep the cap-and-trade flag flying regardless over the next decade and eventually influence policy in other states? Or will it prove marginally relevant at best to any national policy conversation? ...
Even economists who firmly support cap and trade are not sure whether the California program should be considered the vanguard of a distant revolution or a rebel stronghold facing daunting odds.
“It is sort of like keeping a flame alive during what is politically an exceptionally difficult time,” said Robert Stavins, director of the environmental economics program at the Kennedy School of Government at Harvard. “It is now the center of any kind of action.”
The cap-and-trade plan, which calls for reducing California’s greenhouse gas emissions to 1990 levels by 2020, sets a ceiling on climate-warming emissions by the industrial, electricity, transportation and other sectors that will gradually be lowered over time. Companies will be allocated emissions allowances, and as they progress in cutting their emissions, they can sell their unneeded credits to other polluters.
Dr. Stavins suggested that California’s program could eventually link up with the Regional Greenhouse Gas Initiative, a more limited cap-and-trade program involving electric utilities in the Northeast and Middle Atlantic. That combination would create a larger market for emissions allowances.
But “for the time being, that’s not clear,” he acknowledged. The Regional Greenhouse group suffered its own setback last week when Gov. Chris Christie pulled New Jersey out of the 10-state compact, arguing that cap and trade was ineffective. ...
The Pew Center on Global Climate Change notes that more than 30 states have set mandatory goals for the amount of electricity that utilities get from solar and wind energy and other renewable sources and that 36 states have climate action plans, for example.
All these initiatives together could eventually be woven into the fabric of a national climate policy formed not in Congress but in the context of pragmatic state policy, the optimists’ thinking goes. “What we may be seeing is the bubbling up of climate policies from the bottom up,” Dr. Stavins said. ...
Matthew Kahn, an economist at the University of California, Los Angeles, predicts that making difficult economic adjustments, and possibly meeting environmental justice concerns as well, will be partly a matter of trial and error as the cap-and-trade program unfolds.
“A big bet that’s being made on the green economy is that there will be learning by doing,” he said. “We’re providing a free experiment for the rest of the country.”
Here are Matt's thoughts.
