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Carbon Pricing in California Emily Wimberger May 2015
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Outline
• California context for carbon pricing
• California Cap-and-Trade Program basics
• Status update
• The future of carbon policy
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California Context for Carbon Pricing
• Sub-national jurisdiction
• Suite of climate change mitigation measures
• Regulation of air pollutants and greenhouse gases
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The Global Warming Solutions Act of 2006 (AB 32)
• Reduce GHGs to 1990 levels by 2020 – 20% reduction from business as usual
• Sets the path to a 80% reduction in GHGs from 1990 levels by 2050
• Directs design of Scoping Plan of regulatory measures to meet 2020 target
• Authorizes California to adopt market-based compliance mechanism
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• The Global Warming Solutions Act of 2006
• 20% reduction in GHGs by 2020
• Directed ARB to
Climate Change Mitigation Strategy
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2030 Climate Commitments and Greenhouse Gas Reduction Target
• 50% of electricity from renewable sources
• 50% reduction in petroleum usage for transportation
• Doubling of building energy efficiency
• 40% reduction in greenhouse gases from 1990 levels by 2030
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California Cap-and-Trade Program
• The cap covers 85% of GHG emissions in California • 2.37 billion tonnes from 2013-2020
• Declines 2-3% per year
• Covered entities must surrender compliance instruments to cover GHG emissions • Allowances • Offsets credits
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Quarterly Auction Results
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Auction Settlement Over Time
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$10.00
$10.50
$11.00
$11.50
$12.00
$12.50
$13.00
$13.50
$14.00
$14.50
Current Vintage Settlement Price
Auction Reserve Price
Future Vintage Settlement Price
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Secondary Market Carbon Price
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Performance Metrics and Complications
• Metrics • Emission reductions • Energy prices • Auction proceeds • Air pollution co-benefits • Distributional impacts
• Complications • Timing of the analysis • Complementary policies • Leakage
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California Milestones
• 10 quarterly auctions earning $1.6 billion for the Greenhouse Gas Reduction Fund
• 100% full compliance at November 2014 surrender event
• Declining carbon intensity of California’s gross state product
• Linkage • Western Climate Initiative • Pacific Coast Collaborative • International cooperation
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2009 – 2012 CA GDP & Carbon Intensity Trends
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• Use of biogas fills 15% of on-site fuel needs
• Installed 1.5 MW wind turbine and 1.3 MW solar array
• Over the next 20 years will reduce GHG emissions by 6 million tonnes and save $2.5 million
Anheuser-Busch InBev
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Linkage
• Western Climate Initiative • January 2015 Bilateral linkage with Québec
• April 2015 Ontario announces intent to link
• Pacific Coast Action Plan • Oregon, Washington, British Columbia
• Global outreach • MOUs
• Multilateral engagements
• International offset credits
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International Climate Agreements
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Next Steps
• Design Scoping Plan to achieve 2030 target in the context of 2050 goals
• Extend the Cap-and-Trade Program
• Continue linkage discussions
• Consider the role of a carbon price in 111d compliance
• Quantify economic impacts of carbon price
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