(Photo: Gerald Simmons / flickr)
California’s cap-and-trade scheme is in trouble. The latest carbon auction announced Aug. 23 failed to sell two-thirds of the available pollution permits, a third successive flop. That could leave a significant funding gap for other climate measures, such as weatherizing old homes, which are supposed to be paid for by revenue from these state-run auctions.
Tying the fate of important climate actions to the sale of carbon permits has snatched defeat from the jaws of a broader victory in reducing greenhouse gas emissions.
And in a further blow to the credibility of cap and trade, it is regulations such as fuel-emission standards rather than the carbon market that is helping California meet its climate targets. In fact, perversely those same regulations are undermining the cap-and-trade market as they reduce the price of carbon by suppressing demand for the permits. California is bizarrely confronting the greatest challenge humanity has ever faced with policies that work against each other.