US: California governor announces ambitious 2030 target

California Governor Jerry Brown said the state will have to take aggressive and creative steps to reach a target of 40% below 1990 levels by 2030.

Brown made the announcement Wednesday morning. The target is seen as an aggressive target for the state, and it could shape the future supply-demand dynamic.

“This is going to require a significant reduction in carbon emissions,” Brown said during the Navigating the American Carbon World (NACW) conference. “It will require creative ideas. California is now setting the pace, and we are serious about it.”

Brown mentioned during his speech that the state would have to reduce emissions to around 260m tCO2e. The state emitted nearly 440m tCO2e in 2013, according to data from the Air Resources Board (ARB), the cap-and-trade regulator.

The ambitious goal is one of a few aggressive targets that Brown has set this year. During his state-of-the-state speech, Brown announced a 50% renewable portfolio standard (RPS), a 50% reduction in petroleum use and improve building efficiency by 50% by 2030.

Those goals are expected to significantly reduce emission by 2030.

A broker said the 2030 target is bullish long term for California’s carbon market.

“It’s a long way to go,” the broker added. “It should be bullish for the RPS.”

A trader from a trading house said the news was an interesting development for the carbon market, but it would not have an immediate impact on the market. The California carbon allowance market did not react to the news, a broker said.

The state legislature has been debating a post-2020 plan over the past 18 months, but the state had not set an explicit goal. The Air Resources Board (ARB), the cap-and-trade regulator, had planned to outline a 2030 goal by the end of 2017.

An Energy + Environmental Economics (E3) report modeled various post-2020 targets for the ARB. The E3 model found that California could reduce emissions by 38% from 1990 levels by 2030. The report found California may not be able to achieve all of Brown’s climate goals.

A secondary report by Energy Innovation, an energy and environment policy firm, found the state could achieve a target of 40% below 1990 levels by 2030. Dan.McGraw@icis.com