Judge puts cap and trade in California on hold

Harvard’s Stavins: A “misguided objection to a progressive policy”

On Friday San Francisco County Superior Court Judge Ernest Goldsmith put implementation of a cap and trade system in the state on hold. He said the Air Resources Board (ARB), the agency tasked with designing the program, hadn’t properly explored other alternatives to lowering emissions.

The cap and trade program is part of AB 32, the Global Warming Solutions Act, which is designed to lower California’s greenhouse gas emissions to 1990 levels by 2020. AB 32 also includes increased fuel efficiency standards and a renewable electricity target of 33% by 2020, both of which are unaffected by the judge’s decision.

ClimateWire (subs. req’d) reported today that “Most of California’s carbon law [is] unaffected by court ruling”:

Most observers took the view that ARB dodged a potentially fatal bullet in its implementation of cap and trade. Goldsmith could have ruled that a trading scheme was an unacceptable method of reducing emissions. He could also have stayed the entire suite of regulations that the state is pursuing, 69 in all, including a low-carbon fuel standard, local development and smart growth guidelines, and emissions reductions from ships and trucks.

The ruling is the culmination of a multi-year debate among supporters of emissions reduction policies about how to deploy an effective, fair program.


The Sierra Club wrote to Governor Jerry Brown in an open letter last week complaining that companies can offset their emissions by paying companies outside of California to reduce their emissions:

“Excessive reliance on offsets could open up loopholes that undermine the very purposes of California’s AB 32 cap on emissions. Curbing global warming will require a fundamental transformation of our energy economy, a task that cannot be outsourced to other countries. Requiring California’s largest polluters to reduce their own emissions will spur technological advances that can be exported to the rest of the world, bringing green jobs to the Golden State. If polluters are allowed to outsource their emission reductions to other sectors and jurisdictions, the clean-energy revolution will be delayed. Research shows that out-of-state offsets will increase criteria pollution. Air pollution is worst in low-income communities and communities of color, such as the neighborhoods downwind from oil refineries.”

The concern is that if companies aren’t forced to reduce their point-source emissions, the people closest to power plants and refineries will continue to suffer the health consequences.

But cap and trade supporters like Robert Stavins, director of Harvard’s environmental economics program, call the opposition from environmental justice groups a “misguided objection to a progressive policy.” Stavins wrote:

“One expressed concern has been that a cap-and-trade policy might increase pollution in low-income or minority communities. The apprehension is not about greenhouse gases (the focus of AB 32), since these gases spread evenly around the globe and thus would have no discernible impact in the immediate area. Rather, it’s about “co-pollutants,” such as nitrogen oxides, carbon monoxide, and particulates, which can be emitted alongside greenhouse gases.”

“If current limits for co-pollutants are thought to be insufficient, the best response is not to scuttle a statewide system that can achieve AB 32’s ambitious targets at minimum cost. Rather, the most environmentally and economically effective way to address such pollution is to revisit existing local pollution laws and perhaps make them more stringent.”

Tam Hunt, a California-based attorney focused on California regulatory law and policy, tells Climate Progress that he believes the ruling is “a good thing,” suggesting that programs like a carbon fee “would be more direct and easier to implement.”


Although the debate has been ongoing for a few years, it was finally addressed by the court at the 11th hour. The judge says the ARB must go back and show why it made the decision to implement cap and trade. According to Hunt, depending on the length of the review process, it could delay the emissions reduction scheme by another year — perhaps until 2013. In the meantime, California can continue with its renewable energy targets, low-carbon fuel standard and energy efficiency measures.

ClimateWire ended its piece:

Carbon traders, like Josh Margolis, CEO of CantorCO2e, were unconcerned. “He didn’t say CARB’s answer was wrong,” he said of Goldsmith’s ruling. “Like a math teacher, he sent the [functionally equivalent document] back with a note to Mary [Nichols], ‘Show your work.’”

“The sun will come up tomorrow. There will be a cap-and-trade program. We will be trading in 2012.”

— Stephen Lacey