CARBON MARKET MADNESS — Don't look now, but the country's first- and third-largest economies are both pursuing carbon prices on industrial emissions. New York regulators on Monday approved their first-ever "scoping plan," or roadmap for how they're going to cut emissions 85 percent from 1990 levels by 2050, as Marie J. French reports. It includes a policy that's anathema to some on the left: a carbon market. And California approved the fourth iteration of its scoping plan last week, which reserves a significant role for cap and trade through 2045. The policy was the bane of environmental justice groups last time around, but this time they largely held their fire. New York is calling it "cap and invest," but it's the same concept: High-emitting facilities have to either lower their emissions in accordance with the cap, or buy permits to cover them. The proceeds could go to programs that lower emissions on the local level, with priority given to disadvantaged communities, or rebates to cushion higher energy costs for low-income households. Cap and trade has been on the ropes for a while, ever since Congress failed to pass a national program in 2010. It became a policy non grata on the left shortly after that, due to concerns about it allowing industrial facilities, often located in economically disadvantaged areas, to buy their way out of actually reducing emissions. It was a major part of environmental justice groups' objections to President Biden's consideration — and ultimate rejection — of California's top climate regulator, Mary Nichols, to lead EPA. Its enduring attraction is the money. California has raised more than $22 billion since auctions began a decade ago, and has been spending it on things like electric vehicle incentives, affordable housing, tree-planting and repairing drinking water systems. Both states specify that at least 35 percent of the money has to benefit disadvantaged communities. And it's also about the actual goal. Without an overarching carbon cap and an accounting mechanism, it's impossible to know whether the states are actually meeting their targets. "We have this big opportunity at the state level to accelerate ambition because we can take advantage of funding from the federal government," said Katelyn Roedner Sutter, Environmental Defense Fund's California director. "But the IRA doesn't guarantee emissions reductions. We need these limits and we need enforceable policy at the state level coupled with the IRA to actually get the tons." It's still a touchy topic. New York is considering modifications like limits on trading pollution allowances into or near disadvantaged communities, source-specific caps for polluters impacting those communities and targeted air-quality monitoring. "I can't say anything positive about this. All I can say is that at least it's clear that our major concerns were heard," said Eddie Bautista, the executive director of the New York City Environmental Justice Alliance. Environmental groups in California are also still wary, but the debate is being punted to next year, when state regulators plan to consider amendments to the program. California also introduced a new emission-reduction option, carbon capture and sequestration, which is drawing ire away from cap and trade. "There's still huge flaws in the program," said Maya Golden-Krasner , deputy director of the Center for Biological Diversity's Climate Law Institute. Next year is "when a lot of the criticism of the program is going to come." It's just the beginning for New York, which will have to do an entire separate rulemaking to implement the program. Washington (the state, not D.C.) is next, and is moving fast: Its carbon market is starting auctions in February, and officials say they may eventually try to link with California.
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