California’s Cap and Trade Program Survives Court Challenge

Published February 2013 by

California’s carbon emission credit trading program won a round in state court last week.  The court rejected a suit brought against the California Air Resources Board (CARB) by Citizens Climate Lobby and Our Children’s Earth Foundation.

The suit claimed that CARB’s plan to allow corporations to use carbon emission offset credits to comply with the emissions reduction provisions of California’s climate law AB 32 created a loophole that could be used to avoid making real reductions in greenhouse gas pollution.  They also charged that the emissions trading program gave credit to corporations for making emissions cuts that were already required by law.

Under CARB’s program, companies can use carbon offset credits as a compliance instrument to make their greenhouse gas emissions legal.    CARB has systems in place to make sure outside carbon offsets are valid, but admits itself that the evaluation standard is relatively subjective.

This dismissal doesn’t clear all the issues.  A suit was filed against CARB’s emissions credit auction by the California Chamber of Commerce and is still pending in Sacramento courts.  The Chamber claims the auction is actually a tax that CARB has no authority to levy.  Most analysts believe this case will fail as well and the auction will begin as scheduled in early February.

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