Thursday, November 3, 2011

California adopts cap-and-trade program – $10 billion USD in market anticipated by 2016 – Pressure mounts on Saskatchewan to comply

The US state of California has formally adopted a comprehensive cap-and-trade program for greenhouse gas (GHG) emissions. After a hearing on October 21, 2011 the California Air Resources Board (CARB) unanimously approved the final draft of the plan as a central element of California's Global Warming Solutions Act of 2006, a measure that mandates reductions of GHG emission the state to 1990 levels by 2020. The cap-and-trade system targets sources accounting for approximately 85% of annual GHG emissions, with electric power plants and other heavy emitters required to begin compliance in 2013 and other sources scheduled to begin compliance in 2015. California's carbon market is expected to reach $10 billion USD in value by 2016, according to CARB, which will manage the market and hire an auction host and market monitors.

The California cap-and-trade program is working closely with six other western US states and British Columbia, Manitoba, Ontario and Quebec through the Western Climate Initiative (WCI) to roll out a regional program. Saskatchewan is not a “partner” in the WCI but is an “observer” and has expressed some reservations (along with Alberta) regarding a cap-and-trade system. Notwithstanding, Saskatchewan has a provincial offset trading system ready to implement. The Management and Reduction of Greenhouse Gases Act has already passed third reading in the Saskatchewan provincial legislature in May 2010 and can receive Royal Assent and enter into force anytime. It is anticipated that the adoption of the wide-reaching and comprehensive California cap-and-trade program will put increasing pressure on Saskatchewan to implement an emissions trading system in the province in the near future.

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