Tracking banking in the Western Climate Initiative cap-and-trade program

The Western Climate Initiative is a multilateral cap-and-trade program in California and Québec. The California climate regulator has called for cap-and-trade to deliver nearly half of the emission reductions needed to achieve the state’s legally binding limit on greenhouse gas emissions in 2030, making the program the single biggest driver of the state’s post-2020 policy portfolio. However, the program’s supply of compliance instruments has persistently exceeded emissions subject to the program—a condition known as overallocation, which independent studies have projected may continue into the mid-2020s. If market participants purchase and bank excess compliance instruments for future use, they may be able to comply with the program’s regulations while nevertheless emitting significantly in excess of the state’s legally binding 2030 limit. Here, we present methods for tracking observed banking behavior on both an annual and multi-year compliance period basis. By the end of 2018, market participants had already acquired more unused compliance instruments than the regulator anticipated for 2020. The size of the private bank is now comparable to the cumulative mitigation expected from the program over the period 2021 through 2030, raising questions about the program’s ability to achieve its expected reductions. Beyond diagnosing market conditions, banking metrics can also help policymakers design dynamic program reforms that increase program stringency conditional on observed market behavior deviating from expectations

Prove Paris was more than paper promises

All major industrialized countries are failing to meet the pledges they made to cut greenhouse-gas emissions, warn David G. Victor and colleagues

Using remote sensing to quantify the additional climate benefits of California forest carbon offset projects.

Nature-based climate solutions are a vital component of many climate mitigation strategies, including California's, which aims to achieve carbon neutrality by 2045. Most carbon offsets in California's cap-and-trade program come from improved forest management (IFM) projects. Since 2012, various landowners have set up IFM projects following the California Air Resources Board's IFM protocol. As many of these projects approach their 10th year, we now have the opportunity to assess their effectiveness, identify best practices, and suggest improvements toward future protocol revisions. In this study, we used remote sensing-based datasets to evaluate the carbon trends and harvest histories of 37 IFM projects in California. Despite some current limitations and biases, these datasets can be used to quantify carbon accumulation and harvest rates in offset project lands relative to nearby similar "control" lands before and after the projects began. Five lines of evidence suggest that the carbon accumulated in offset projects to date has generally not been additional to what might have otherwise occurred: (1) most forests in northwestern California have been accumulating carbon since at least the mid-1980s and continue to accumulate carbon, whether enrolled in offset projects or not; (2) harvest rates were high in large timber company project lands before IFM initiation, suggesting they are earning carbon credits for forests in recovery; (3) projects are often located on lands with higher densities of low-timber-value species; (4) carbon accumulation rates have not yet increased on lands that enroll as offset projects, relative to their pre-enrollment levels; and (5) harvest rates have not decreased on most project lands since offset project initiation. These patterns suggest that the current protocol should be improved to robustly measure and reward additionality. In general, our framework of geospatial analyses offers an important and independent means to evaluate the effectiveness of the carbon offsets program, especially as these data products continue improving and as offsets receive attention as a climate mitigation strategy

An Economic Assessment of Low-Carbon Investment Flows in the U.S. Power Sector

This study used the GT NEMS model to analyze how the proposed federal regulation on carbon emissions will impact investments in the U.S. electricity generating capacity at the federal and Census Division level for 2016-2030. Results show that in order to reduce emissions by 32% by 2030, cumulative investments will increase from 399 to 414 billion USD by 2030. Under the scenario which addresses carbon leakage - covering new and existing power plants - cumulative investment will reach 475 billion USD by 2030. Addressing carbon leakage will affect not only the size of the investments but also the direction: when only existing power plants are covered investments in natural gas remains almost unchanged (123 billion USD) relative to the Reference case; while under the scenario that covers all power plants, investment in natural gas will be 24% lower and the investments in renewable will be 64% higher than the Reference. Carbon regulation will produce not only losers and winners among energy sources but also among U.S. states. While the South and Midwest states will experience much higher increase in cumulative investments with respect to the national average; Northeast and West states will reduce their overall investments by 2030 under the policy scenarios