California eyes joining EU emissions trading scheme

By Jeff Mason

BRUSSELS (Reuters) - California hopes to link its planned emissions trading system to the European Union's market, boosting efforts to build a global mechanism to fight climate change, aides to Governor Arnold Schwarzenegger said on Thursday.

California, which is charging ahead with measures to combat global warming despite skepticism from President George W. Bush's administration, is looking at launching a system to trade rights to emit greenhouse gases, much like the one in Europe.

"Our governor has asked us to design a market that could be compatible with the ETS, the European trading system," Linda Adams, secretary of the California Environmental Protection Agency, told reporters after a meeting with EU lawmakers.

"We learned this morning that it's going to be very complicated to develop our own market," she said.

The 27-nation EU's Emissions Trading Scheme kicked off in 2005, setting limits on how much carbon dioxide (CO2) -- the main gas blamed for heating the earth -- oil refineries or power generators may emit.

Companies that exceed their limits must buy permits to emit more, while those that come in below their cap can sell their extra allowances on a market.

But the EU's success has been mixed. Data from 2005 released last year showed that EU governments had given industry more emissions rights than it needed, sparking a carbon price crash.

California is the 12th largest carbon emitter in the world. In September, Schwarzenegger signed the California Global Warming Solutions Act, which calls for the creation of market mechanisms to help the state reduce emissions by 25 percent by 2020.

Leaders from Schwarzenegger's cabinet were part of a California delegation that this week met officials from the European Commission and European Parliament to learn more about the EU system.

Commission environment spokeswoman Barbara Helfferich said that California's entry could mark the beginning of a global emissions trading system.

"We hope that California will be able in the near future to be the first non-European region that would join the emissions trading system," she said.

Adams said she hoped California's leadership would spark a pan-U.S. market and urged other nations to join the fight against climate change.

"California and the European Union can't solve this problem alone," Adams said. "We think working together and working with China and India and other countries will lead to a solution."