But the Cap & Trade Program Remains on Hold

Friday provided another blip in a confusing court fight over California’s centerpiece climate law, known as AB 32.

A “final” ruling from a Superior Court judge in San Francisco allows most implementation of the 2006 Global Warming Solutions Act to go forward, except for the carbon trading plan known widely as “cap & trade.” Regulators at the California Air Resources Board (ARB) will have to flesh out their prior assessment of alternatives to cap & trade that could also result in reducing the state’s total greenhouse gas emissions.

Analysis of those alternatives is required under the California Environmental Quality Act (CEQA). While ARB officials still insist that their original work was adequate under the law, groups representing an “environmental justice” agenda had sued, claiming that alternatives had not been fully explored.

Judge Ernest Goldsmith agreed, and previously issued a preliminary ruling that appeared to shut down all efforts toward implementation of the law. Some observers thought the ruling jeopardized even measures supported by separate legislation, such as the state’s tailpipe emissions standards and renewable energy targets.

So ARB’s reaction to Friday’s ruling was mostly a sigh of relief. According to a written statement from spokesman Stanley Young:

“We are pleased that the court’s decision enables ARB to continue moving forward on implementation of a range of AB 32 measures to reduce greenhouse gas emissions, drive innovation, improve energy security, and steer California to a clean energy economy.

But the order expressly prohibits the Air Board from “engaging in any cap and trade-related project activity that could result in an adverse change to the physical environment,” until ARB fully complies with CEQA. ARB says it will continue its fight on the cap & trade front:

“We respectfully disagree with the court’s determination that ARB did not adequately analyze alternatives to cap and trade program in the Scoping Plan, and will file a notice of appeal on Monday.”

In their own statement, plaintiffs in the case celebrated putting the brakes on cap & trade, at least temporarily:

“We are encouraged that the Judge is now requiring CARB to take a hard and honest look at cap and trade,” said Bill Gallegos, Executive Director of Communities for a Better Environment, one of the environmental justice plaintiffs in the lawsuit.  “We have even more evidence now that cap and trade does not work to reduce greenhouse gas emissions. In the European Union, emissions have increased by 3% in the past year under their program, and we also know that cap and trade has the worst impact on health in low income communities and communities of color,” Gallegos added.

The first auctions of emissions permits under the cap & trade program are scheduled to start early next year. “That’s eminently doable,” says David Pettit, a Santa Monica-based senior attorney with the Natural Resource Defense Council. Pettit said that ARB analysts went back to work on alternatives when the first preliminary court decision came out, months ago, so the additional “homework” required by the court is well underway.

As to the many other provisions under the law, Pettit said “The vast majority of the essential programs needed to meet AB 32’s GHG limit are unaffected by this ruling.” NRDC is a supporter of cap & trade.