Smooth Sailing for California Cap-and-Trade

The launch of the California carbon market was watched with much scrutiny worldwide and in the United States. California is the 12th largest economy in the world, and its cap-and-trade program, with a cap over 400 million metric tonnes (Mt) in 2015, is the second largest compliance program in the world. California leaders are committed to setting an example for the nation and for the world of a tightly-run, ambitious emission trading program that would blaze the trail for other states and countries to follow. Given the state of disarray of the EU ETS and the Clean Development Mechanism (CDM), both vastly oversupplied, and the slow progress of climate policy at a U.S Federal level, the bar was high for California’s new program. Almost a year after the launch, how is California doing?

Healthy allowances trading

One of the biggest worries for the California was the potential lack of liquidity on the secondary market. With less than forty-five large emitters (over 500,000 t of annual emissions) in the first compliance period, the pool of potential market participants was fairly narrow, especially since a number of these emitters receive at least part of their allocation for free. Yet trading has proven healthy, with 377,480 t average daily volume year-to-date (YTD) for all vintages together, according data from the InterContinental Exchange (ICE) and Evolution Markets. (…)

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About this article:

This article was published as part of the International Emissions Trading Association (IETA) Greenhouse Gas Market 2013 report. The publication brings together carbon market professionals, policymakers, academics and NGOs to provide in-depth analysis and perspective on the main issues affecting carbon policy worldwide. IETA is global in its outreach and the publication features latest developments in current and emerging carbon markets, as well as taking a step back to consider the wider implications of climate policy design and implementation.

The Full Report of IETA Greenhouse Gas Market 2013 features the following articles:

The Markets: Existing Policies Around the World

1. EU ETS: The Cornerstone of Future EU Energy and Climate Policy? – Sarah Deblock, IETA and Ingo Ramming, Commerzbank
2. EU ETS Pricing and Trading Trends: Improving Outlook– Trevor Sikorski, Energy Aspects
3. Smooth Sailing for California Cap-and-Trade– Emilie Mazzacurati, Four Twenty Seven
4. Australia Carbon Policy Update – Martijn Wilder, Baker and McKenzie
5. Can the Obama Administration meet its Copenhagen Goals? – Tom Lawler, IETA and Bruce Braine, American Electric Power (AEP)
6. The Regional Greenhouse Gas Initiative: Building on Success – Colin O’Mara, Secretary of the Delaware Department of Natural Resources and Environmental Control
7. Canada’s Tradable GHG Intensity Standard for Oil and Gas: The implications of leading proposals – Dave Sawyer, EnviroEconomics, and Dale Beugin, IISD

The Future: Carbon Markets On The Rise

8. The Road to 2020: What Will We Get? – Pedro Martins Barata, Get2C
9. China’s Carbon Market. Where Next? – Wu Qian, British Embassy, Beijing
10. An Overview of Emissions Trading in Korea – Dalwon Kim, European Commission DG Climate Action
11. Kazakhstan’s developing ETS – an example of emerging carbon pricing schemes in the East – Friso De Jong, Janina Ketterer, and Jan Willem Van de Ven, European Bank for Reconstruction and Development (EBRD)
12. Market and Non-Market Approaches: A Hybrid Approach in Taiwan – Hui-Chen Chien, PhD, Taiwan Environmental Protection Administration, Wen-Chen Hu, Industrial Technology Research Institute (ITRI), Robert Shih, YC Consultants, Ltd.
13. Using Offsets Within the South African Carbon Tax Regime – Patrick Curran and Alex McNamara, Camco Global
14. Toward a cap on the carbon emissions of international civil aviation: One Step Forward in 2013 – Annie Petsonk, Environmental Defense Fund (EDF)

The Design: Examining What Makes Climate Policy Tick

15. Prospects for the World’s Offsetting Market – Can the Patient be Cured? Guy Turner, Bloomberg New Energy Finance
16. Fragmented Markets with Fragmented MRV Practices: Does it Matter? – Madlen King, Lloyd’s Register Quality Assurance (LRQA)
17. What’s Covered? Trends in Coverage of Different Sectors and Gases – Edwin Aalders, Det Norske Veritas (DNV KEMA)
18. The Cost of Carbon Pricing: Competitiveness Implications for the Mining and Metals Industry – John Drexhage, International Council on Mining and Metals (ICMM)
19. Case Study: California’s Response to the Lessons Learned from the EU ETS – Melanie Shanker and Chris Staples, Linklaters

The Bridges: Aligning Markets Within a Fragmented Architecture

20. Carbon Pricing, the FVA and the NMM: Charting a Course to a New UNFCCC Agreement – David Hone, Royal Dutch Shell PLC
21. The Linking Rainbow: Evaluating Different Approaches to Joining Carbon Markets – Anthony Mansell, IETA and Clayton Munnings, Resources for the Future (RFF)
22. Japan’s Joint Crediting Mechanism: A Bottom-Up CDM? – Takashi Hongo, Mitsui Global Strategic Studies Institute
23. Lessons from the PMR’s First Years and Looking Forward – World Bank PMR Secretariat
24. The B-PMR: One Year On – Mark Proegler (BP) and Karl Upston-Hooper (Greenstream)
25. Leveraging the Potential of the Voluntary Carbon Market as a Credible Tool for Mitigating Climate Change – Sophy Greenhalgh, IETA and International Carbon Reduction Offset Alliance (ICROA)
26. When Trade and Carbon Collide: WTO and Climate Policy Realities – Elisabeth DeMarco, Norton Rose Fulbright

The Tools: Financing Low Carbon Development

27. Financing the Transformation: The Importance of the Private Sector – Paul Bodnar, United States Department of State
28. Adding to the REDD Finance Toolbox – Charlie Parker, Climate Focus
29. NAMAs: Aligning development imperatives with private sector interests – Frédéric Gagnon-Lebrun and Jorge Barrigh
30. The Green Climate Fund: Paradigm Shift or Incremental Improvement? – Gwen Andrews, Alstom
31. Analysing the Potential for a CDM Capacity Fund – Joan MacNaughton, IETA Fellow and Vice Chair, UN High level Panel on the Policy Dialogue on the CDM
32. Towards Supranational Climate Tax or Levy: The Case of the Adaptation Fund – Laura Dzeltzyte
33. Private Sector Finance for Adaptation – Gray Taylor, Bennett Jones LLP


Picture credits: Robert Bissett, Smooth Sailing