Calif. holding ‘very preliminary’ carbon market talks with N.Y.

Source: Elizabeth Harball, E&E reporter • Posted: Wednesday, January 13, 2016

California Air Resources Board Chairwoman Mary Nichols yesterday said her state is in “very preliminary” talks with New York to explore the possibility of linking carbon markets.

The idea of linking California’s cap-and-trade system with New York’s was first proposed by New York Gov. Andrew Cuomo (D) late last year. He envisioned a “broader North American market to collectively reduce harmful emissions” (ClimateWire, Oct. 9, 2015).

“We’ve had very preliminary conversations through the governor’s office with the [Regional Greenhouse Gas Initiative] states about these issues,” Nichols said yesterday at an event hosted by the Center for Global Development in Washington, D.C.

Nichols’ comments yesterday were the first time a California official has acknowledged the possibility of allowing carbon allowances to be traded between parties in her state and in New York.

However, Nichols stressed that no decisions have been made. Linking the systems would be a convoluted process, she said, partially because her state’s program covers all sources of carbon emissions, while the Northeast cap-and-trade program that New York participates in only covers carbon emissions from power plants.

“I don’t think that there’s any inclination on their part to go to an economywide cap-and-trade program at this point, and we’re not inclined to do just a power plant program, so we will have to explore whether there are other ways that we could link,” Nichols said.

“It would not be the kind of full linkage that most people have thought about unless we make some changes in our programs,” she added.

Nichols said the process of linking California’s program with the Canadian province of Quebec demonstrated the complexity of what is required to expand her state’s program into other jurisdictions.

“Under California law, the governor and the attorney general both have to certify that any entity that we link with as a system is fully compliant with California’s,” Nichols said. “Their rules have to be as stringent, their enforcement program has to be as good. We have to be able to send inspectors into their jurisdiction and they have to be able to send them to ours. There are a lot of details to be worked out.”

However, Nichols added that the Obama administration’s Clean Power Plan, which aims to reduce America’s power plant emissions by 32 percent from 2005 levels by 2030, “is providing a real strong push for all states to look separately at their electricity systems, including ours.”

“We are looking at whether there are ways that our power producers would benefit — or might benefit — from some more direct form of linkage, but this is very exploratory at this point,” Nichols said.