Carbon Markets Show Their Resiliency

Sheldon Zakreski, The Climate Trust
Weekly Policy and Finance Update – May 7, 2018

THE BOTTOM LINE.

Things have been quiet in the U.S. carbon world lately. The markets are functioning smoothly. California is focusing on the regulatory details to govern its post 2020 cap and trade market. Oregon is kick-starting a bicameral committee to ensure cap and trade passes the legislature in 2019. Meanwhile, Utah is gearing up on the cap and trade front as well.

However, their approach is to figure out how to launch a commerce clause challenge against California’s cap and trade system. The legislature passed and the governor approved allocating $1.7 million to fund this challenge. While many might think “here we go again,” another challenge to undercut confidence in the market, I see this challenge as a sign of the resiliency of carbon markets.

Despite political rhetoric that this is a tax, cap and trade gives Utah electricity suppliers the flexibility to use whatever fuel they desire and to install technologies to reduce emissions (clean coal anyone) to lessen the carbon cost associated with exporting electricity to California. I guess that’s for the legal minds to figure out. This political effort is, however, indicative that policies and markets are here to stay and grow. Rather than accept and adapt to the building momentum towards a carbon market, Utah has chosen to try and throw a hail marry against the many market forces that are moving us towards cleaner energy.

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Image credit: Flickr/Mark Jensen