California is edging closer to launching its first auction of carbon credits as part of its fledgling cap-and-trade program.
The program aims to reduce carbon emissions throughout the state by instituting a cap on how much greenhouse gas a company can produce. The concept has been steeped in controversy for some time. The federal government had once planned to institute a similar program, but the initiative was ultimately defeated. California became the first state in the country to adopt this kind of plan to curb carbon emissions. Since then, much of the nation has been keeping a keen eye on the performance of the program to see if it will be a failure or success.
During the auction, businesses in the electricity, industrial and transportation sectors will bid on carbon credits.
These credits will determine how much carbon dioxide these companies can produce in a given timeframe. Over stepping the boundaries of the credits will bring heavy fines to offending companies. Because a great number of the state’s companies are expected to show interest in the coming auctions, the California Legislative Analyst’s Office expects that the auction will generate approximately $3 billion for the state. A trial run of the auction is currently scheduled for some time in August.
If the auction is successful, it will likely have significant implications for other states. The program could be adopted by other states as a way to curb carbon emissions and bolster the economy. These programs could go a long way in promoting alternative energy as it would encourage companies to abandon their fossil-fuel energy systems as a way to meet a state’s cap on carbon emissions. The overall success of these programs would vary from state to state, though the economic benefits are expected to be significant.
California plans to lower the cap of carbon emissions by 2-3% every year until 2020. This is meant to be further encouragement for companies to adopt alternative energy systems. The program will be enacted in a serious of phases, with the initial phase covering the period between 2013 and 2014. This phase will apply only to the electricity sector and large industrial facilities. The official beginning of the cap-and-trade auction is expected to be in November of this year.
Article: California moving closer to cap-and-trade auction of carbon credits
Article Source: Hydrogen Fuel News
Author: John Max