Time framework for implementation

Climate change is happening much faster than experts originally predicted during the IPCC Third and Fourth Reports. The urgency of global warming needs a rapid response from society. The time framework for taking prompt actions is tilting to carbon emission trading rather than carbon taxation after the successful climate negotiation of COP21 in Paris 2015. All the 195 parties of COP21 agreed to a voluntary reduction of GHGs emissions under the Paris Agreement, which came into effective on November 4, 2016. The agreement gives parties discretion to make their own choice to determine how to implement their Nationally Determined Contributions.107

The Paris Agreement gives flexibility for parties to make policy choices. However, the trend toward adopting carbon emission trading by many nations and regions is obviously demonstrated in recent years.

106. Id. at 27.

107

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The landmark 2014 agreement between China and the U.S.,108 committing each nation to reduce emissions and promote cleaner energy sources was the key that enabled the successful climate agreement in Paris. It inspired a record number of nations to submit their intended nationally determined contributions to climate mitigation and adaptation.109 And many of these contributions involved adoption by nations, regions and cities to adopt incentive programs to reduce their carbon emissions such as those considered here.

Thus, China announced its initiation of pilot cap and trade programs that were to culminate in a national market of carbon emission trading in 2017 covering power generation, steel, cement, civil aviation, and other key industrial sectors. Despite the abandonment by the Trump Administration in the U.S., many U.S. states, regions and local governments have stepped up to the plate, several including three adoption of carbon markets by Regional Greenhouse Gas Initiative (RGGI), Western Climate Initiative (WCI), and Midwestern Greenhouse Gas Reduction Accord (MGGA). At the same time, carbon emission trading programs are growing in Latin America and the Caribbean, Asia-Pacific region and Central Asia.

The European EU ETS was adopted to become by far the largest and most instructive carbon trading initiative. It has been proved an effective method to fight climate change and now covers more than 11,000 installations in 31 countries, including 28

108_{Office of the Press Secretary, U.S.-China Joint Announcement on Climate Change, The White}

House (Nov. 12, 2014),

https://www.whitehouse.gov/the-press-office/2014/11/11/us-china-joint-announcement-climate-change (last visited Nov. 8, 2017).

109

Patrick Parenteau & Mingde Cao, Carbon Trading in China: Progress and Challenges, 46 ENV‘TL LAW REPORTER 10194, 10194 (2016); see also, Gerarda Ceballos et al., Accelerated Modern Human-Induced Species

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EU member states, as well as Norway, Iceland and Lichtenstein and airlines performing aviation activities between European Economic Area (EEA) airports, creating a functioning market infrastructure and a liquid market.110

A California cap-and-trade program provides a progressively declining cap serving to drive down emissions reductions in line with its ambitious climate change targets. From 2015 onwards, the state‘s cap is scheduled to be cut by about 3% each year.111

At the same time, the program also increased revenues and job opportunities. ―California Delivers,‖ a broad coalition of stakeholders, asserted that ―polluters are paying for their emissions through the cap and trade program, creating revenues that flow into California communities, spurring the growth of clean energy and contributing to more affordable housing, facilitating construction jobs across the state, as well as affording living opportunities for working families.‖112

The Regional Greenhouse Gas Initiative (RGGI) of Northeastern U.S. states has also shown significant environmental and economic benefit. The RGGI report states ―fuel-switching, improved energy efficiency, and growing renewable energy output have caused emissions to drop by 37% since RGGI launched.‖113 The rate of pollution reductions continues to exceed expectations, with 2015 emissions falling 6%

110

International Carbon Action Partnership, Emissions Trading Worldwide: International Carbon Action Partnership (ICAP) Status Report 8 (2015).

111

Supra note 102, at 12.

112

California Delivers, Bring real benefits to California consumers,

http://www.cadelivers.org/wp-content/uploads/2014/11/CAdelivers-ConsumersFactSheet-FINAL5715.pdf (last visited Nov. 8, 2017).

113_{Acadia Center, Status Report 1: Measuring Success, Regional Greenhouse Gas Initiative [hereinafter ―RGGI‖]}

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below an emissions cap that was tightened only in 2013.114

RGGI has also generated significant economic benefits. By auctioning allowances, RGGI states raised over $1.56 billion in energy bill savings during its first six years of operation.115 The majority of program revenue (59% during the second control period, 2012 to 2014) has been invested in renewable energy and energy efficiency programs that reduce consumers‘ bills and reduce demand for power.116

Furthermore, with the continuing downward trend of carbon emissions of recent years, electricity prices are lower than they were before RGGI‘s inception in 2009. Retail electricity prices from 2008 to 2015 show that prices have dropped by 3.4% across the region.117 This is so while the rest of country experienced an average 7.2% increase in retail electricity prices over the same period.118

The details of these programs will be explained further and analysis of their strengths and weaknesses will be presented.

Finally, carbon emission trading is designed to achieve emission reductions that comply with the targets set. According to the RGGI report ―all nine states have established economy-wide GHG emissions reduction targets for 2030, and eight of the nine states have corresponding targets for 2050.‖119

A study predicts that achieving a 40% reduction not only yields $25.7 billion in total savings from 2016 through 2030,

114.Supra note 113, at 3. 115. Supra note 113, at 9. 116. Id. 117. Supra note 113, at 4. 118. Id. 119

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but also generates benefit for consumers, workers, and the environment.120