Capitol Alert

California should link carbon market with Europe, Jerry Brown says

Gov. Jerry Brown, speaking at a joint conference of the European Parliament on Tuesday, urged leaders here to explore linking their cap-and-trade system with California.

The Democratic governor and leader of the world’s sixth-largest economy pitched the prospect of a formalized California-Europe pact as a “concrete investment” that could compel more states and international provinces to tackle the climate challenge at a global level.

California, which recently renewed its carbon market for another decade, already collaborates with Quebec on cap-and-trade and will soon be joined by Ontario, creating the largest such agreement in the world outside the European Union.

European leaders joined Brown in urging “new cooperation” with the state and other jurisdictions in their carbon markets.

In an interview in Brussels, Jerzy Buzek, the former Polish prime minister and a member of the European Parliament, said officials “should think in such a collaborative way.”

“I could support it,” Buzek added when asked whether linking the markets could be a viable proposal.

European Parliament officials, joining Brown to speak with reporters, said their primary focus was how to raise the hundreds of billions of dollars they estimate are needed to reach greenhouse gas reduction targets.

“We have a major financial challenge,” said Miguel Arias Cañete, the commissioner for Climate Action and Energy, who is representing the European Union at United Nations climate talks in Bonn, Germany.

Brown’s address to the crowded conference came between meetings with Cañete and European Parliament President Antonio Tajani. The governor touted his contentious extension of cap-and-trade as the centerpiece of California's effort to reduce carbon emissions.

The system requires polluters in the oil, cement and electric industries, among others, to obtain carbon-emitting permits and caps their level of emissions.

Brown told the parliament the program’s renewal was embraced by businesses because the state had adopted a limit on emissions that would become more stringent each year.

“The industry did not want to be ruled so much by regulation,” he said.

California uses a wide range of methods, including clean cars, the low carbon fuel standard, reductions of methane and short-lived climate pollutants to help meet its climate targets established by law.

Still, there are many reasons why the state might pursue such an agreement on cap-and-trade. Economists believe markets that are deeper and have more instruments tend to operate more efficiently.

It wouldn’t be the first time California has coordinated with the European Union. The governments have collaborated on a range of policies, including carbon pricing, since passage of Assembly Bill 32 in 2006.

While officials structured the cap-and-trade system to allow for linkage outside the state, they stressed that tying the system to other governments could take many forms and is not necessarily a speedy regulatory process.

A law on the books identifies a handful of requirements outside partners must meet. The entity must have an equally stringent program that can be enforced. There is also the possibility of forging a partial link with Europe should talks develop to that level.

Christopher Cadelago: 916-326-5538, @ccadelago

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