California Cap-and-Trade Put On Hold—At Least for Now

Back in 2006, during flusher times, the California legislature passed and then-Gov. Arnold Schwarzenegger signed AB 32, the California Global Warming Solutions Act. That Act requires the state by 2020 to reduce its emissions of greenhouse gases to 1990 levels. Last year, California residents voted down a referendum which would have delayed implementation of the Act until unemployment rate in the Bear Republic state had fallen below 5.5 percent. The current unemployment rate remains at over 12 percent.

Yesterday, a state court judge put on hold the cap-and-trade scheme devised by the California Air Resources Board to implement AB 32. As the San Francisco Chronicle reports:

California's attempt to implement its landmark global warming law with a market-oriented "cap-and-trade" system of pollution credits hit a snag Monday with a judge's ruling that the state had not looked hard enough at alternatives.

The ruling by Judge Ernest Goldsmith of San Francisco Superior Court does not prohibit the state Air Resources Board from adopting cap and trade or explicitly require that officials delay its scheduled implementation next year. But Goldsmith said the board must first analyze other options, such as a tax on carbon emissions, and explain why it did not choose them.

The state agency "seeks to create a fait accompli by premature establishment of a cap-and-trade program before alternatives can be exposed to public comment and properly evaluated," Goldsmith said in Friday's ruling, which the state and environmental group that sued over the plan received Monday.

As the CARB spokesman Stanley Young told the Chronicle:

A broadly worded ruling "puts at risk a range of efforts to move California to a clean-energy economy and improve the environment and public health," Young said.

Whatever a cap-and-trade scheme may do for the climate,  it will not fufill the goal of creating lots more jobs as is often claimed by clean energy proponents. Last February,  I noted in my column, The Unseen Consequences of "Green Jobs", that a 2009 report [PDF], by Hillard Huntington, executive director of the Energy Modeling Forum at Stanford University concluded:

"Policymakers and government agencies should look askance at the claimed additional job benefits from green energy."

In addition, another study by University of Texas economist Gurcan Gulen agreed:

"Adding 'net' jobs cannot be defended as another benefit of investing in these [green] technologies."

Despite the fondest hopes of its proponents, building out clean energy projects is not the panacea for our current economic woes. In any case, the court ruling does not rule out the eventual adoption of a cap-and-trade scheme.