New research using the California Energy Policy Simulator finds California climate policies risk overshooting the state’s 2030 goal by 25 MMT CO2e, but six policy fixes can hit the goal and deliver $21 billion in benefits.
Carbon pricing is increasingly used to reduce carbon emissions through carbon taxes and cap-and-trade programs, and the most important new development in carbon pricing is China’s national carbon market. This research note discusses how California’s “consignment auctioning” approach to allowance distribution provides an option for Chinese policymakers to introduce auctioning while cushioning economic effects on covered entities through free allocation.
New data show that carbon emission allowance oversupply has grown in the Western Climate Initiative cap-and-trade program linking California, Ontario, and Quebec. Left unaddressed, this oversupply is estimated to reach 270 million metric tons by 2020, resulting in higher than intended emissions. This report details how a straightforward lowering of future caps to counter early oversupply solves the problem.
For the first time last year, a portion of the current vintage allowances offered in one of the California-Quebec cap-and-trade program’s quarterly auctions went unsold. This report provides a quantitative analysis of the supply and demand for carbon allowances in the linked California-Quebec cap-and-trade program to help discern the role that temporary or systemic oversupply may be playing.
This paper synthesizes the reasons for California’s successful climate policy. It considers the relative strengths and weaknesses of different types of policy, concluding that performance standards have led in reducing statewide emissions. Market failures beyond the lack of a price on carbon mean the best policy approach combines the three types of policy: performance standards, economic signals, and research and development (R&D).
This white paper is the first in our Incentive Mechanism Design series, which offers perspective on how regulators might decide to design performance incentive mechanisms for success. The paper examines California’s Risk-Reward Incentive Mechanism (RRIM) as a case study to show that, while counterfactuals may be appropriate as an adjustment mechanism, they can also lead to unfair outcomes and unnecessary regulatory conflict.
This study investigates how California’s electric sector can help achieve deep reductions in greenhouse gas emissions. Modeling results from Phase I of the study reveal that the state can reduce emissions by more than 50 percent below 2012 levels with minimal rate impact, minimal renewables curtailment, and at not cost to reliability. Phase II adds new insight, adding detailed flexibility analyses and examining the effects of drought and different resource mixes on the grid.
Negotiations by the world leaders at the COP21 summit should be guided by California’s experience. This paper describes how performance standards and carbon pricing mechanisms have helped the state reduce emissions and increase renewable energy while creating economic growth, putting the state well on its way to achieving its emissions goals.
California can accomplish its goal of reducing carbon emissions 40% below 1990 levels by 2030 with proper attention to smart growth. By emphasizing better land use patterns, and supporting better transit and more walkable neighborhoods, carbon reductions of this magnitude are not just technically feasible, but would also save billions of dollars on infrastructure, fuel, and health costs while empowering economic growth and helping counter income inequality.
California can accomplish its goal of reducing carbon emissions 40% below 1990 levels by 2030 with proper attention to Smart Growth. By emphasizing better land use patterns, and supporting better transit and more walkable neighborhoods, carbon reductions of this magnitude are not just technically feasible, but would also save billions of dollars on infrastructure, fuel, and health costs while empowering economic growth and helping counter income inequality.