A proposed California bill would require the Air Resources Board (ARB) to create a post-2020 target for its cap-and-trade programme by January 2016, providing carbon market participants with more certainty a year ahead of the body’s proposed timeline.
The ARB, the governing body of the state’s cap-and-trade scheme, didn’t set a post-2020 target in its scoping plan, which outlines the future of the carbon programme, earlier this month. The board instead said it hoped to develop a post-2020 target by 2017.
Senators Fran Pavley and Ricardo Lara submitted a bill on Wednesday that would require the ARB to submit a report with recommendations for reducing greenhouse gases post-2020 in two years.
For the bill to become law, it would have to be voted and approved by members of the California legislature by 31 August. Governor Jerry Brown has the power to veto any bill approved by the state legislature until 30 September.
California is aiming at reducing its emissions to 1990 levels by 2020 via carbon trading. Beyond that, the state has a goal of reducing emissions to 80% below 1990 levels by 2050, but the board has not set intermediate targets.
Traders have been eagerly awaiting a post-2020 target, because the plan could provide further certainty to the market. Traders said it could also alter companies strategies for banking and purchasing California carbon allowances (CCAs). An ambitious 2030 cap, for instance, could see companies with long positions holding onto their surplus to avoid the risk of possibly turning short in the future. Dan X. McGraw