California introduced an ambitious energy road map today to achieve the state’s goal of cutting emissions by 28 percent. The policy mandates that a third of the state’s energy should come from renewable sources, and also boosts the efficiency of appliances, buildings and automobiles. Facilitating this entire process, the California Air Resource Board has proposed a cap-and-trade system on carbon emissions from utilities, the power industry and businesses. The plan represents one of the most aggressive economy-wide cap-and-trade systems in the U.S.
This plan provides the details for the state’s 2006 decision to cut emissions to 1990 levels by 2020, which Schwarzenegger signed into law but left to regulators to figure out. The plan does not estimate the burden of the cost on the effected industries, though Mary D. Nichols, head of the California Air Resources Board, tells the New York Times their “macroeconomic analysis” shows the plan will actually boost California’s gross domestic product by one percent.
While the plan might hit traditional fossil fuel industries hard, it will be a boon for cleantech companies across the board. An aggressive renewable portfolio standard in California has already driven a lot of clean power innovation in the state. And companies selling energy efficient products and services could potentially generate revenue for businesses through carbon credits salable on the newly minted carbon market.
California, one of the largest economies in the world, will serve as a large-scale experiment for a carbon cap-and-trade system. Congress recently blocked an attempt to institute a federal cap-and-trade system. Should California’s cap-and-trade system fail to work as planned, Nichols says the board could look to a carbon tax the San Jose Mercury New reports.
With fossil fuel prices already hitting record highs, especially in California, consumers can expect to see energy prices continue to climb under this proposal. But it will force the power industry to account for the cost of their carbon emissions and continue to spur development in the cleantech sector.
Up next? This is just the first draft of the details to meet the emissions goals — the final plan is due in November.