One thing the Clean Power Plan did really well was include what was called a state measures approach that recognized that more complete markets and programs of the sort that California and others have were appropriate for compliance, with appropriate cross modeling and appropriate controls.

EPA’s current proposals are legally and factually incoherent. For years now, within the general federal 111 D regulations, there’s been explicit permission for emissions trading when appropriate. EPA for years has used appropriate market designs when that’s made sense, and it’s completely unclear to me why that would not be permissible here as a matter of law given the long history of the use of these tools in many different contexts with appropriate enforcement and design. That said many of the proposals in the thin replacement document are designed to impede the efficiency of market functioning, either intentionally or as an accidental matter.

– Craig Segall, Assistant Chief Counsel, California Air Resources Board
(Rising from the Ashes: State Responses to the CPP Dismantling)

I don’t think that the fact that we’re experiencing this now necessarily means we will experience it forever going forward. The more we develop these markets at the state level, the more power companies realize how workable a lower carbon future is for their business model, the more stakeholders we have who have something to gain in this system, the more politically durable it becomes going forward. Which is part of why I think the opportunity to build more markets at the state level, the more people get comfortable with this structure and the more renewable energy companies are successful, energy efficiency companies are successful, trading companies are successful, that just changes the politics. Which is why we still have the production tax credit for wind and solar even with this Congress and this president – because you have industry stakeholders that fought for it and fought for it to remain even after the transition.

– Megan Ceronsky, Executive Director, Center for Applied Environmental Law and Policy
(Rising from the Ashes: State Responses to the CPP Dismantling)

We’re financing right now several projects for customers that have large demands – customers that say you know we’ve developed / we’re developing an operation here we need two million tons, do you have two million tons, but not from your existing inventory if you have it, we want to be part of a new story we want to we want our money to go towards a new project being built…

A lot of our buyers are looking for something that really fits their story, something that’s local. We all understand climate change is global but that doesn’t matter to the buyer, so sometimes they’re wanting local – you know I think that is a big void in Canada for voluntary markets so I think we need to have some expansion in Canada with respect to voluntary but I think prices will see them naturally trend up even if you just look at the supply-demand fundamentals. We’ll see them trend up, we are seeing them trend up.

– Bill Flederbach, President and CEO of ClimeCo Corporation
(State of the North American Carbon Market)

The price has reacted to the things that have happened in the last year, especially AB 398. The passage of AB 398 took a lot of uncertainty out of the market. It kept the price above $15 for the remainder of the year.

And the uncertainty in Ontario kind of pushed it back down below that price level. That’s the second piece of the puzzle that’s been impacting price in the last year – entities started to reassess the political risks in Ontario and the potential that the PCs could withdraw the province from the program.

And then the third, which I think is really impacting the price currently and especially in the last auction, are the unsold allowances that are returning into auctions that didn’t sell out in 2016 and 2017. Auction volumes upwards 90 million – so much higher than the levels we’ve seen with 14 to 16 million roughly returning in each auction now between Q1 2019, assuming things all sell out as scheduled, so that’s suppressing the price to some extent right now.

– Jackie Cooley, Lead Market Analyst, ICIS
(State of the North American Carbon Market)

The oversupply is fake news – people can quote me on that.

There is a fundamental conceptual disagreement between two groups – one very small group and basically everyone else. The theory presented by that group is that reductions in the economy are driven by the high prices, so the fact that we have cap and trade is not as important as the fact that there’s a price on carbon and in the view of that group really what’s important is having a very very high price in the market. Whereas with most the conventional wisdom is that you have a cap and people limit under the cap – that’s what gets you to the reduction level, then the market establishes the price to get to that level, but what what provides the integrity is not the price it’s the cap.

That is a discussion that is still happening in Sacramento right now especially in connection with the price ceiling discussion. The new program 398 for the first time in a cap-and-trade program in California has a higher price ceiling as opposed to a soft allowance price containment reserve. And the price ceiling is not set in the legislation in 398 so ARB needs to establish it over the next couple of months, well really the next 12 months, and these groups that believe that prices are driving the reduction want that price to be very high whereas other groups would like that price to be set at a more reasonable level.

– JP Brisson, Partner, Latham & Watkins
(State of the North American Carbon Market)

There is no mention of the word markets in the Paris agreement or in fact any mention of the word pricing in the Paris agreement itself and that gives you some indication of the delicate dance that was being done in Paris and that still continues in part today.

Part of the promise of carbon markets and international carbon markets as expressed in article 6 of the Paris agreement is their ability to facilitate the use of international cooperation/ use of markets to put a price and a limit on carbon pollution in order to drive up investment in clean energy and sustainable development and drive down pollution. My colleagues at EDF have been modeling this question of exactly how much more emissions reductions could you get with the efficiency savings that come with a global carbon market and the answer is about double.

– Alex Hanafi, Senior Manager, Multilateral Climate Strategy and Senior Attorney, Environmental Defense Fund
(State of Play for the Paris Agreement and the Role of Article 6)

Donald Trump does not represent all Americans and despite his announcement of withdrawal from Paris, we continue to have major sectors of society driving to decarbonize the US economy.
…
The deal was that by 2020 countries would either formally inscribe their nationally determined contributions or they would update them, which is code for hopefully strengthen them, but that is a very political process especially given what Mr. Trump has done with the United States. If you’re in China, India, Brazil, how do you justify to your publics that you are going to put more on the table than you did in Paris when the world’s largest economy and second largest polluter has said it’s not going to comply with what it agreed to in Paris.

– Alden Meyer, Director of Strategy and Policy, Union of Concerned Scientists
(State of Play for the Paris Agreement and the Role of Article 6)

We are talking about three different mechanisms in Article 6 that we must address and in in a technical way. In order to clarify what is an ITMO, we are not talking about credits or bonds, we are talking about ITMOs – Internationally Transferred Mitigation Outcomes – those are the credits of the future. There will be a subsidiary body in the in the UNFCCC but also in the COP that will oversee the the procedures of these cooperation mechanisms among us to trade ITMOs. So this is one of the cooperation option in Article 6. The other one is the SDM. Not the CDM, the mechanisms for sustainable development cooperation mechanisms. And the other one that is under Article 6.8 is the non market approaches. So these three different options we must balance the things that will be part of our business and the things that could be part of our international cooperation efforts in order to really achieve the the Paris agreement targets.
…
In the future, we will have regional markets in Asia, in North America, in Latin America, in Europe – and we will trade among those regional markets and we will trade among different countries. And in order to have a real record of all these transactions that are related with the indices with our commitments, we need to establish the metrics, we need to establish an information system.

– Rodolfo Lacy, Under Secretary of Policy and Environmental Planning at SEMARNAT
(State of Play for the Paris Agreement and the Role of Article 6)

The lower chamber – the Chamber of Deputies – has already passed amendments to the Mexican climate law. Mexico is the second country after the UK to have passed a federal climate bill and so this has been handled at the federal level and now it’s up to the Senate to pass these amendments that will include a legislative mandate for the Ministry of Environment to implement an ETS in Mexico.
…
In general, in Mexico both for the federal system and at the local level, I think data quality and transparency, basic MRV, is the big challenge and that’s one of the big homeworks that the federal government will have and I think what we have to consider is that all these will have to be aligned to the new system that is going to be emerged at at the federal level.

– Blas L. Pérez Henríquez, Founding Director of the California Global Energy, Water & Infrastructure Innovation Initiative, Stanford University & Director, Stanford – USAID Mexico Clean Economy 2050 Global Development Alliance
(Subnational Leadership on the Canadian Provincial and Mexican State Levels)

When we did not have federal climate change leadership at all not that long ago, there was this massive development action explosion across provinces that were taking it very very seriously. A challenge was that they were doing it in a very siloed manner. What you have under the pan Canadian framework is the coordination with the federal government and all provinces and territories. They have now been working together in order to coordinate on key aspects across climate policy generally, and also related to markets and carbon pricing. The ultimate goal around the pan Canadian framework on climate change and clean growth is really to make sure that Canada reach its its NDC. Canada has a target – it’s not absolute target, you might even want to say it’s a cap right at 30 percent below 2005 by 2030. It has to work with subnationals a lot in order to help reach this target. Carbon pricing is a major focus of that pan Canadian framework.

– Katie Sullivan, Director of the Americas and Climate Finance, IETA
(Subnational Leadership on the Canadian Provincial and Mexican State Levels)

The first thing that’s really important to see about Canada is that we have 722 megatons of emissions and one province has 275 of them and that’s Alberta. So there is no solution to the climate change issue in Canada without dealing with Alberta.

The system Alberta put in does two things: first of all it put a levy, a carbon tax, so we actually have a carbon tax in Alberta on burning fossil fuels; and secondly for industry they still have the emissions intensity system but now instead of measuring against your own historic emissions intensity they measure it against something close to best-in-class.

The second largest emitter is Ontario, which decided to go down the road of cap and trade. So we put cap and trade in place in 2017, on January 1 2018 we linked, and so we have a cap-and-trade system that I think frankly is ideal.

– Gray Taylor, General Counsel and Principal, Climate Solutions Group
(Subnational Leadership on the Canadian Provincial and Mexican State Levels)

The California Climate Investment program is really focused on greenhouse gas emissions reductions. We have implemented 215,000 individual projects over the lifetime of the program. 0f those projects about anywhere from 30 to 50 percent of the funds directly benefit or indirectly benefit disadvantaged communities. Of the six billion dollars that have been appropriated about half is already on the ground with half still remaining to go out the door through these existing programs. The programs are largely grouped into three areas: (1) housing and transportation, (2) natural and working lands and waste, (3) and then energy efficiency and renewable energy. And I would say the lion’s share of the effort is really in that transportation and housing area because the lion’s share of our emissions in the state come from those areas.

– Ashley Conrad-Saydah, Deputy Secretary for Climate Policy, California Environmental Protection Agency
(California Auction Revenue at Work: Meeting Critical State Needs)

In many ways through our collective work we’ve been able to emphasize equity as a component of our implementation of these dollars by making investments in the communities that are in most need. About a billion dollars have gone to those disadvantaged communities. But what is equity, what’s an equity outcome – we are not of one mind about what equity means and what an outcome is, so I think one of the challenges we have in terms of tracking the actual benefits is that we are good at tracking what we’re able to agree is the result we want to see. GHG reduction is something we want to see, so we’re very capable of tracking that. And in fact it’s a required methodology that you need to abide by to be able to get access to the resources. Things like the number of dollars going into a community, we can track that easily. But when it comes to other kinds of benefits, especially equity benefits, we have a much harder time. Number one, because we don’t have a shared definition of what that is. Number two, because that in some ways is not the intended purpose of the revenue. And number three, because if we don’t have the first two, we don’t know what we’re supposed to be measuring. So at this point I think we’ve done a tremendous job of planning for equity to be included in our implementation, I think what we need to do now is planning for implementation with an equity outcome focus, creating plans for equity implementation so that our colleagues who are working with us on implementing these dollars know exactly what the outcome is that we’re seeking to achieve.

– Alvaro Sanchez, Director, Environmental Equity, The Greenlining Institute
(California Auction Revenue at Work: Meeting Critical State Needs)

When we think about the market measures that we do have on the table, pricing is a really big thing that folks are focused on right now. How do we ensure that there’s enough of a price to send the signal for the innovation, but not so much of a price that we’re killing jobs in the very communities that we’re trying to help.

How do we ensure that more of these offsets are benefiting California communities directly is a really important conversation. We know we have a statewide target that can’t be met if a lot of things are happening away from California. We also have legitimate concerns about these communities that are where a lot of our GHG emissions are coming from, ensuring that there’s investments going there that are reducing those emissions, and achieving the co-benefits that were envisioned in AB 32.

– Katie Valenzuela Garcia, Principal Consultant, Joint Legislative Committee on Climate Change Policies
(Local Stories: Environmental Justice Issues, Goals and Investments)

We don’t have enough cap and trade money to deal with all of the need out there, it’s just not enough. Then and when we talk about the environment and environmental means or inequities, we’re also talking about the social environment not just the ambient environment, and that is a societal responsibility. It cannot be just industry’s resources being leveraged, cannot be just cap and trade revenues that are going to solve the problems. They can be a catalyst, they can be a support, they can enhance, they can help, but there’s a much larger need that has to be a part of that in order to move the needle on public health and air quality and local investment and equities. I think that it is too big for climate revenues to drive.

– Deidre Sanders, Director, Government and Community Affairs, East Bay Community Energy
(Local Stories: Environmental Justice Issues, Goals and Investments)

Technology in the natural and working lands sector – so we don’t have Teslas or solar power necessarily but we have trees that grow and go through photosynthesis and eel grass that grows in the bay and pulls carbon dioxide and stores its carbon and the ocean sediment, so there are all these natural resource technologies essentially that we can harness to start to generate these negative emission strategies. and so we set a target in the scoping plan for the first time to reduce emissions from this sector by 15 to 20 million metric tons of carbon dioxide equivalent by 2030 so that’s really the first time there’s been sort of an in all lands carbon strategy in California.

– Claire Jahns, Assistant Secretary, Natural Resources Climate Issues, California Natural Resources Agency
(California Policy Roadmap: the Updated Scoping Plan and Direction of State Agencies)

Agriculture represents about 8% of the overall greenhouse gas emissions here in California that is currently measured in the inventory. So we’re here because agriculture is part of our climate emissions. Agriculture is also definitely part of the solution as well. And it is immensely impacted by climate change.

We’re really looking at the ability for for soil carbon sequestration to not only to play a role in carbon sequestration but also managing soils for other benefits as well. There’s a lot of other benefits for soil management practices that extend beyond the climate benefits of soils – for water quality, for dust control, for managing diseases, those sorts of things.

Again 8% of our emissions in the state is coming from agriculture, over half of that is methane from dairy and other livestock agriculture, but primarily dairy. Part of the scoping plan is a reduction goal to reduce methane emissions from dairy and other livestock agriculture by 40 percent by 2030 so that’s an ambitious goal…We have both our dairy digester research and development program and also our alternative manure management program, and we are in the process of rolling out that money we receive – $99 million in this past year. We have funded a substantial amount of dairy digesters here in California. In our first round, we funded six digester projects and then another 18 so far in our in our next round and then we’re currently reviewing that $99 million round so we’re really starting a huge exponential curve up in digester technology.

– Jenny Lester Moffitt, Undersecretary, California Department of Food and Agriculture
(California Policy Roadmap: the Updated Scoping Plan and Direction of State Agencies)

When we look at where the emissions are in California, almost 40% of the emissions come from the transportation sector. We’ve done a lot on transportation but it’s still a huge sector in California as we go out into the future. It continues to be a huge sector, it’s really important that we tackle that. The next largest sector is the industrial sector, so about 20% of our greenhouse gas emissions come from the industrial sector. And about 20% of our emissions come from electricity. So those are the major areas that we tackle in the scoping plan, but it’s also important to tackle areas that don’t seem as big now but have a large growth potential.

High GWP gases like refrigerants are only 4% of our inventory now but the growth is astronomical, so we’re looking at things that we can do to reduce emissions from high global warming potential gases, as well one of the things that’s not included in our pie of greenhouse gas emissions – emissions from the natural and working lands sector. So these are missions that are harder to characterize, harder to project out into the future, and we haven’t fully integrated them into our system but they’re really important.

We did our first scoping plan in 2008, so it’s been about 10 years since we laid out our first plan for how we were going to reduce greenhouse gases in California. And one of the things that’s really important from our perspective to point out is that in California our economy continues to grow and we’re also seeing that our gross state domestic product is increasing while our greenhouse gas emissions are decreasing, so we’re becoming a more energy efficient and carbon efficient state.

To hit the 2030 goal we need to reduce about 4% a year. It’s a 40% reduction in 10 years, so these are really aggressive reductions that we’re looking at in California going out into the future.

– Edie Chang, Deputy Executive Officer, California Air Resources Board
(California Policy Roadmap: the Updated Scoping Plan and Direction of State Agencies)

A green bond is a borrowing by a governmental or a private entity the proceeds of which will be used for a project which produces environmental benefits – it cleans water, it reduces greenhouse gas emissions, it remediates environmental challenges in its jurisdiction, it serves a purpose which reduces the demand we place on the atmosphere from tailpipe emissions, so it can have a fairly broad interpretation. You can know a green bond when you see it because it’s trying to do something that is environmentally responsible.
…
What the data indicates to us right now is that in the primary market as a whole there’s no differential. I mean you don’t get any advantage by going green. However, there is starting to be, not yet sufficient to make a broad statement, but starting to be evidence that in the secondary market there is an advantage of 10 to 25 basis points. And as the evidence of that grows, what you’re going to see is that there is goint to be a, I won’t say a flood, but there’s going to be a lot more demand. Right now green bonds are being snapped up they go out and they are oversubscribed almost immediately when they’re then traded on the secondary market – we’re starting to see an advantage.

– Tim Schaefer, Deputy Treasurer for Public Finance, Office of California Treasurer John Chiang
(The Growing Role and Impact of Climate Finance)

So sometimes it’s like that famous court case – you’ll know it (a green bond) when you see it. But sometimes it’s not as clear and in that case, I can see a need for an assessment to be done and a verifier to be the appropriate thing. What I ask is that we not assume that all transactions are the same and look at them on their individual basis so I don’t want to have a get to a point where all green bonds have to pay for an assessment or a verification even when it’s a drinking water bond.

– Teveia Barnes, Executive Director, California Infrastructure and Economic Development Bank
(The Growing Role and Impact of Climate Finance)

To get an agreement between 192 countries was a really hard thing to do and one of the things that made that work is the first six years of the system are an opt-in system for countries. We start in 2021, but they get to volunteer. Actually we’ve had 73 countries already sign up for participating in CORSIA beginning in 2021, representing 88 percent of international aviation activity. And six years after that it becomes mandatory for all countries, except for those that are the least developed countries and have the tiniest amount of international aviation activity. So actually doing opt-in system has proven to be really effective. Most major countries are in, except for the ones you might think would be a little skeptical like India and Brazil and Russia, but the United States is in and recently confirmed – don’t tell anybody – recently confirmed that we are continuing to go forward with our CORSIA commitment.

– Nancy Young, Vice President of Environmental Affairs, Airlines for America
(Taking Flight: the Development of CORSIA)

CORSIA could be a really good thing for the voluntary carbon market in terms of expanding the number of interested market participants and simply the demand for the credits. It’s great to see this sort of next phase of the carbon market – where California was almost sort of a stepping stone here. They still built their own system, but they outsourced some of the services to the offset project registries and now we’re seeing this sort of next phase of decentralization where there are several you know carbon programs around the world that have risen up over the last you know decade or so and following a lot of the same rigorous standards and you know coming at things in different ways but all producing quality credits so they might as well leverage that.

– Max DuBuisson, Policy Director, Climate Action Reserve
(Taking Flight: the Development of CORSIA)

Our commitment to strong environmental protections is a leading reason why California remains the nation’s capital of innovation. We didn’t grow into the world’s sixth largest economy and the epicenter of innovation by embracing alternative facts or pseudo scientific nonsense, that’s not who we are as a great state. In this state we make public policy based on facts as well as science.

These ideas, these goals are not democratic in nature, nor are they progressive, nor are they Republican. But they’re driven by science and facts. The issue of climate change is no longer scientific, as we know it’s a political issue. The scientists have done their jobs by providing us all the empirical evidence that’s needed to understand what is in front of us.

If we’re gonna meet our macro global target goals unless you democratize your climate change benefits we’re never going to reach them. That’s why you have to move policies with intentionality that are statutory in nature and not allow the free market to correct these inequities because the free market left to itself will never correct the socio-economic and political inequities that exist today.

While it’s certainly not helpful to have a hostile Congress and administration in Washington, it won’t be enough to halt the global momentum of clean energy. I’m very very optimistic about the future for a few key reasons. First as we already discussed is the power of state and local leadership. The second is the growing international movement momentum even among the largest global polluters like China as well as India. Finally and perhaps most importantly is incredible technological breakthroughs of recent years and their effects on global markets. As clean energy costs continue to decline demand will increase employment will grow and the political dynamic will shift. In the meantime we will continue to use every legal and political tool at our disposal to accelerate this process and by doing so will continue California’s trailblazing tradition.

– Hon. Kevin de Leon, California Senate President pro Tempore Emeritus

So what does a solution start to look like? Well I think there’s a few practical steps in that. One of them is we have to meet the Paris agreement. But if we did everything in Paris we still don’t get there fast enough – so we still have our Thelma and Louise moment, we just slowed the rate at which we’re hitting the cliff, we’re still going over the cliff and the point is if you’re going over the cliff it doesn’t really matter what speed you’re going over the cliff. The whole point of this is to hit the brakes before you get to the precipice and the point of no return.

What else would you have to do? And I thought well what are the big carbon sinks – the
forests and the oceans, so ecological restoration would have to move up and become a part of that. One of the biggest things that you could do quickly to start to restore the carbon balance is try to get intact canopy full of our forests.

So do everything in Paris, add ecological restoration of our oceans or forests. The third thing that gives me hope about where we’ve got to go – and these all relate to carbon markets because it’s all about producing the capital to do these things – is the technologies that actually take carbon dioxide out of the atmosphere. Decarbonizing the atmosphere should be a huge priority for all of us.

We know that cap and trade drives out the most efficient reductions in greenhouse gas
emissions, we know that the proceeds from cap-and-trade when properly spent take care of the things in the economy, the infrastructure challenges, that markets can’t drive out. They deal with social equity issues, they decarbonize housing.

– Glen Murray, Executive Director, Pembina Institute