Carbon caps around the world

By Andrew Wineke, Ecology Communications 

In July, Governor Jay Inslee directed Ecology to craft a regulatory cap on carbon pollution, using the state’s authority under the Clean Air Act to limit emissions of greenhouse gases in Washington. 

This week, we formally kicked off the rulemaking process to develop the cap. Over the next several months, we’ll be holding a series of public meetings and hearings, and gathering input from industry, environmental groups, tribes and people just like you.

It’s too soon to say exactly how that carbon cap will work or what the system will look like. But while this will be completely new for Washington, if you look around a little, you’ll see that carbon caps have been around for some time now all across the world.

Cap and trade or other carbon limits are already at work in California, British Columbia, much of China, the entire European Union, nearly every Northeastern state in the U.S., and other places.

What we come up with for Washington won’t look exactly like any of these systems. We need to develop an approach that fits Washington’s economic and environmental needs. Nevertheless, there are lessons we can take from many of these systems, and looking at how other states, provinces, cities, countries and regional organizations have tackled this challenge should give us confidence that capping carbon pollution can be done successfully.

Here’s an overview of some prominent carbon policies, along with links for more information:

British Columbia

Our neighbor to the north passed a carbon tax in 2008, assigning a price to every ton of emissions generated in the Canadian province. In 2012, that tax raised $1.2 billion (Canadian), which was offset by lowering other taxes. British Columbia started the tax at $10 a metric ton, and gradually raised the tax to the current $30 (Canadian) per metric ton of carbon dioxide– about $22 a ton in U.S. dollars ­– allowing residents and businesses to take measures to adapt and reduce their carbon pollution.

Independent estimates have found that by 2020 the B.C. carbon tax should reduce carbon dioxide emissions in the province by 3 million metric tons a year – equivalent to taking about 787,000 cars off the road.

For more information, visit the British Columbia Ministry of Finance.

California

The Golden State instituted a cap and trade system in 2013, covering carbon dioxide and other greenhouse gases. Power plants and other major emitters in the state were awarded emissions allowances, while additional allowances were auctioned off (raising $969 million in 2014, and currently priced at about $12 a ton). As the name “cap and trade” implies, companies that have excess credits are able to sell or trade them.

The cap is gradually ratcheting down by 2-3 percent a year, pushing the state to reduce its overall greenhouse gas emissions to 1990 levels by 2020. In 2015, the program expanded to include gasoline and diesel wholesalers.

For more information, visit the California Air Resources Board.

Northeastern U.S.

In the Northeastern United States, nine state governments joined together in 2008 to create the Regional Greenhouse Gas Initiative, or RGGI. The participating states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont, with a combined population of 41 million people (New Jersey was also a member, but withdrew in 2011).

Although RGGI is a cap and trade system, it operates somewhat differently from California’s version. The Initiative covers only carbon dioxide emissions from large power plants. And, instead of issuing these plants allowances at the outset and allowing them to buy additional credits, RGGI auctions almost all of the allowances and power companies have to bid on the amount they need.  Proceeds from the auctions, now a total of $2.2 billion, fund renewable energy projects and conservation measures.

Like California’s system, RGGI ratchets down the number of allowances each year by 2.5 percent until 2020. In 2015, the cap is 66.8 million tons. A report published in August found that RGGI has already reduced emissions in the region by 24 percent.

For more information, visit the Regional Greenhouse Gas Initiative.

European Union

The biggest carbon pollution cap in the world today is the European Union’s cap and trade system, which covers 500 million people in 31 nations. The program aims to cut emissions to 21 percent below 2005 levels by 2020.

The EU system includes power plants and major energy users that account for about 45 percent of total EU emissions, including more than 11,000 businesses and, notably, commercial aviation in the region.  The system gives away about half of the available allowances, then auctions the rest, with the cap ratcheting down by 1.74 percent each year.

For more information, visit the EU Emissions Trading System.

China

China is sometimes portrayed as an obstacle to significant worldwide carbon pollution reductions. However, the world’s second-largest economy has invested heavily in renewable energy and is experimenting with a cap and trade system in many of its most important regions.

In 2011, China launched a series of seven pilot programs establishing carbon trading systems in cities and provinces, with a goal of moving to a national system in 2016. The regional systems include Beijing, Tianjin, Shanghai, Guangdong, Shenzhen, Hubei and Chongqing. The design of the regional systems varies, but each covers between 35 and 60 percent of the total emissions within its jurisdiction.

For more information, visit the National Development and Reform Commission.