SACRAMENTO, Calif.
California runs one of the world’s largest carbon markets, known as “cap-and-trade,” which requires companies to buy, trade or receive pollution “allowances” equivalent to how much they plan to emit.
California’s market has been closely watched by both advocates and critics of efforts to control emissions using market forces, not mandates.
But companies that participate have saved up so many allowances — 321 million — that it could hurt the program’s ability to force significant emissions reductions, according to a report finalized last week by the Independent Emissions Market Advisory Committee, a group of five experts appointed by lawmakers and the governor.
One allowance is 1 metric ton of carbon dioxide equivalent emissions, about the same level of emissions produced by driving a car 2,500 miles .
The air board does not make public who holds banked allowances and there is a limit on how many an individual emitter may possess.
Rajinder Sahota, deputy executive officer for climate change and research at the air board, said it has tools to ensure banked allowances don’t jeopardize the program’s goals, such as taking allowances off the market if they don’t sell for 24 months.
Companies covered by cap and trade collectively emitted less between 2018 and 2020 than they did from 2015 to 2017, air board data shows.
The state has brought in more than $18 billion through quarterly auctions of allowances, and it goes toward other programs designed to cut emissions.
Environmental justice advocates have long argued against it, saying it does little to improve air quality for people who live next to large polluters.
“Offsets” are projects aimed at removing carbon from the atmosphere, and companies can use a limited amount instead of carbon allowances.
Bob Wieckowski, a Democrat, said he should have pushed harder to bar companies from keeping saved allowances after 2021, forcing them to start fresh.