The eighth largest economy in the world has a new carbon cap-and-trade program in place. And no, it's not a country in Europe, it's the State of California, which this week auctioned the rights to emit 60 million tons of carbon dioxide.
The California Air Rights Board auction serves to set a price on the emission of a ton of CO2. Companies can decide whether to invest in cleaner, more efficient systems, or can choose to pay for the right to pollute. As noted in the Marketplace report, "We've been living in a world where there is no price on pollution," says Dan Kammen, a professor of energy policy at U.C. Berkeley. "It doesn't send the right signals. It doesn't reward innovators."
Absent such a system, industry has been free to exhaust CO2 into the atmosphere without regard to impact on others. Establishing a market for carbon emissions will begin to put a price on that right, and to allow the true costs of carbon emissions to be more accurately reflected in the economy.
The California Chamber of Commerce has filed a lawsuit to object to the auction, but the Air Rights Board believes that the auction will withstand legal challenge.