California’s cap-and-trade program for reducing greenhouse
gas emissions has just cleared a big legal hurdle in the state courts (story
here).
And this could be important
for the transportation sector.
Why?
Unlike some other cap-and-trade programs, California’s very
explicitly includes transportation fuels.
And if it proves successful in encouraging cleaner transportation it
could provide a model for other states.
Climate change experts and policy makers are looking more
closely at the California system for three reasons:
1.
The transportation sector has recently overtaken
the electricity generation sector as the leading source of greenhouse gas
emissions in this country. While
GHG emissions from electricity generation have been going down (government
regulations, cheap natural gas), emissions from transportation have been going
up (cheap gasoline, rising post-Recession VMT).
2.
Although many strategies for transportation GHG
reduction have been developed – and many of them have been at least partly
implemented – the trend lines are not good and even aggressive implementation
of more conventional strategies looks to fall short of science-based targets
for emission reductions.
3.
The federal government appears to be out of the
game for the foreseeable future, leaving the initiative for climate policy
squarely in the hands of the states.
The California program is (not surprisingly) a bit
complicated.
A good overview can
be found
here.
One of the key features of the California program is that it
generates significant revenue, which by law has to be plowed back into “green”
investments.
(Some people have
called a program like this “cap-and-invest” rather than “cap-and-trade.”)
According a recent report to the
Legislature (
here), in the first four years of the program, $3.4 Billion has
been appropriated from cap-and-trade proceeds.
In the transportation sector, this has funded, among other
things, more than 100,000 rebates for zero-emission and plug-in hybrid vehicles
and more than 200 transit projects.
At least 25% of the appropriations from the program must be
targeted for disadvantaged communities.
California policy makers have decided – I think wisely – that for both
practical and moral reasons it’s a bad idea to make rural and disadvantaged
communities pay a premium, say in higher gas prices, without receiving targeted
investment in their mobility needs.
Is California-style Cap-and-Invest coming to other
states? Perhaps. It certainly has major potential
benefits and should be watched closely as it develops.