California Delays Cap-And-Trade Enforcement Until 2013

Due to continuing legal battles, California regulators have decided todelay enforcement of the state’s carbon-trading progrom until 2013, the Los Angeles Times reports.

The program is scheduled to take effect January 1, but in May a Superior Court judge halted progress on the program, saying the California Air Resources Board had failed to properlyconsider other strategies for reducing greenhouse gas emissions asrequired by state law. 

CARB is currently putting together alternatives that will be consideredfor adoption in late August. It is also challenging the May ruling, and a state appellate court ruled last Friday the regulators can continuepreparations to launch the program while awaiting further legaldecisions. 

However, CARB Chairwoman Mary Nichols said on Wednesday regulators willneed additional time for "all necessary elements to be in place andfully functional."

The delay will not affect the ambitions of the program, though. Nicholstold a state Senate committee that companies required to participate inthe program will still be required to draw down their emissions by 2020. So, even though enforcement won’t begin until 2013, the 600 industrialfacilities affected by the program would be smart to begin implementingreduction strategies right away.

"This is still a green light on cap-and-trade. The program still beginsin 2012, but regulated entities would not need to prove compliance until 2013. It is like giving students more days to turn in their homeworkfor the year," Ricardo Bayon, a carbon-market expert with SanFrancisco-based EKO Asset Management Partners, told the Times.

California’s carbon market is expected to be the largest in the US whenit launches. Projections suggest it will handle $10 billion in carbonallowances by 2016. 

"The one-year period will allow us to road test market mechanisms to see how they work while ensuring that the greenhouse gas pollutionreductions required by the program remain intact. By getting this right, California can serve as a model for other states and countries," StateSen. Fran Pavley told the Times.

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