WCI releases draft design of cap-and-trade program
July 25th, 2008 by Jim JustThe Western Climate Initiative (WCI) released its Draft Design of the Regional Cap-and-Trade Program on Thursday, July 23. The cap-and-trade program is set to launch January 1, 2012. While the proposal is an important first step, there’s plenty of room for improvement. Here are some concerns.
The target. The first problem is with the target. The WCI earlier established a regional goal of a 15% reduction in greenhouse gas emissions below 2005 levels by 2020. That’s not nearly enough to get atmospheric CO2 back down to 350 ppm and thus avert climate catastrophe.
Start date. The initial cap is to be set at the best estimate of expected actual emissions from covered sources in 2012. No emitter has any incentive to limit their emissions until 2012. Rather, they have an incentive to emit higher than normal CO2e during 2011-2012 in order to skew the baseline. And of course, there is no start date for uncovered sources, which are left free to pollute.
Emission threshold. WCI would regulate only facilities or entities (e.g., first jurisdictional deliverer, fuel distributor, fuel blender) emitting 25,000 metric tons of carbon dioxide equivalents (CO2e) annually. Smaller emitters are off the hook.
Transportation. transportation is in – but not until 2015.
Auctioning: WCI has punted. “The Partners expect to make a recommendation on this issue by Fall, 2008.”
Offsets. The draft Scoping Plan suggests limiting offsets to 10% of a firm’s “compliance obligation” (defined as the total emissions a firm generates under the
cap). Because the capped sectors (transportation, electricity, natural gas, and
industry) will collectively be allowed to emit 365 MMT of CO2e (million metric tons of carbon dioxide equivalent) in 2020, this suggested 10% limit implies that up to 40 MMT of reductions could be achieved through offsets, if each firm uses its allotted 10%. Yet the cap-and-trade program is only tasked with achieving about 35 MMT off reductions in the overall plan. Most importantly, offsets suck.
Carbon credits weren’t designed to lower emissions. They were designed to shift emissions around. Practically speaking, they will delay the day when we start lowering them.
UPDATE: Eric de Place has a three-part series at Sightline Institute looking at the details of the WCI, here, here, and here. It’s a must read.