After last week’s election in the US, carbon market participants awoke to an icier political climate. California may be the lone victory in the election for the market, as many Cap and Trade supporters have been replaced. This week’s issue digs through this and other election day rubble to bring you the latest in voluntary carbon news.
After Tuesday’s election in the US, carbon market participants awoke to an icier political climate. California may be the lone victory in the election for the market, as many Cap and Trade supporters have been replaced. This week’s issue digs through this and other election day rubble to bring you the latest in voluntary carbon news.
NOTE: This article has been reprinted from Ecosystem Marketplace’s Voluntary Carbon Newsletter. You can receive this summary of global news and views from the world of Voluntary carbon automatically in your inbox every two weeks by clicking here.
4 November 2010 | After Tuesday’s election in the US, carbon market participants awoke to a new political climate, with the winds of change blowing hot or cold depending on your vantage point.
At the high level, the market achieved what may be a lone victory in California while Obama says that Democrats’ support for sweeping climate legislation may have fueled Republican gains in the House of Representatives.
The administration came out on Wednesday with a cool attitude toward cap and trade, and that had an immediate and stifling effect on prices for Regional Greenhouse Gas Initiative futures contracts and raised concerns among European analysts about the outlook for US leadership in the international climate change fight.
Says Thomas Klau, a senior analyst at the European Council on Foreign Relations, “What this election is likely to do is confirm that there is no chance in the foreseeable future of the U.S. being disposed to engage in a deal to fight climate change.”
It’s a different story on the US West Coast, where California’s AB32 cap and trade scheme received a nod of approval from voters who were among the first to ever have the opportunity to vote on a climate policy.
Voters soundly defeated Proposition 23, which would have postponed AB32 implementation barring a fall in the state’s unemployment rate. Analysts are now breathing a sigh of relief and looking to the California Air Resources Board’s final draft of proposed regulations, which were issued a few days before the election.
With trepidation, however, some are also looking to the voter-approved constitutional amendments found in Proposition 26, a possible back-door block on funding for the AB32 program and other environmental initiatives.
Other Western Climate Initiative member jurisdictions also gained some clarity on the tools they will use to reduce emissions as part of the regional trading scheme. Last month, British Columbia released proposed rules for its regional scheme and inclusion of offsets – documents that were anticipated in September but delayed.
New Mexico regulators also confirmed their desire to take part in the WCI, but may find their state’s role challenged by Republican governor-elect Susana Martinez.
If all of the WCI pieces fall into place, however, the west could operate a cap and trade program that’s one third the size of the European scheme (the EU ETS). Says Evolution Markets’ Lenny Hochschild, “It’s not a huge market – but not a small one, either.”
Hochschild spoke at this week’s Carbon Market Insights America hosted by Point Carbon in New York City, where attendees suggested a handful of ways forward for US carbon markets, including:
1) Touting cap and trade as a source of revenue to address state, regional and national fiscal shortfalls; 2) expansion and linkage of regional programs as member states gain market capacity and understanding of market mechanisms; 3) a renewed mandate for Democrats in 2012 – and a re-branding of the cap and trade climate solution.
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