The United Nations Climate Change Conference – or Paris 2015 – is just around the corner, seven months to be exact. The goal is ambitious: to develop a viable, and comprehensive, successor to Kyoto, applicable to all countries, and with the aim of keeping global warming below 2 degrees centigrade. Expectations are tempered, but hopes remain high as the particulars begin to take shape and individual nations confer their climate goals. Conspicuously absent thus far however, is any meaningful carbon dialogue from the world’s second largest emitter, the United States.
The Intended Nationally Determined Contributions or INDCs are beginning to pour in and the public declarations will serve as fodder for any international agreement in Paris. To date, Gabon, the European Union, Mexico, Norway, Russia, Switzerland, and the United States have published their INDCs. Together, this group accounts for approximately 34 percent of global CO2 emissions – the US alone is responsible for about half of that.
Individually, support for international market mechanisms a la the European Union’s Energy Trading System appears to be widespread – a pattern attributable to their growing success worldwide, and in the US, at the state level.
In the US Northeast, the Regional Greenhouse Gas Initiative (RGGI) is exceeding expectations. Since 2008, the cap and trade program has reduced emissions from the power sector by 30 percent. Over the first three years of the program, RGGI states turned $912 million in proceeds into $1.6 billion in economic value for state economies and created 16,000 new jobs.
In California – the world’s 8th largest economy – cap and trade is off to a roaring start. Since its inception in 2013, the program, which covers 85 percent of the state’s GHG emissions, has already seen capped emissions fall by 4 percent. Jobs growth, economic output and efficiency, and clean technology venture capital investment are all up significantly – and well above national averages – since the Global Warming Solutions Act became law. As of 2014, California’s market is fully linked with Quebec – a bond that aims to pave the way for similar linkages worldwide.
Despite the resounding success of state and regional carbon markets, the US federal government has been slow to recover from the failure of the American Clean Energy and Security Act in 2009 – the same year the Climate Conference in Copenhagen failed to deliver what we now expect in Paris. In fact, the US position has hardly changed since then: no carbon market, no tax, and no legally binding agreement.
According to its INDC, the US will not employ international market mechanisms to implement its 2025 emissions targets. Instead, The US reduction commitment will largely fall to President Obama’s contentious Clean Power Plan. For its part, the GOP is working diligently to dismantle the EPA mandate, the US INDC, and, by and large, the entire Paris accord.
Obviously, a global carbon tax or cap and trade system doesn’t begin with the US – carbon taxes of varying degrees already exist in 15 nations and cap and trade programs are even more widespread – but without its clear support, much less cooperation, Paris 2015 and any subsequent mitigation efforts will have substantially less bite, not to mention effect.
First published at Oilprice.com