Regional U.S. carbon markets got a boost from Tuesday's mid-term elections but their backers have a lot of work to do before they notch significant environmental gains.
In California, voters upheld the state's climate change law despite a campaign by oil refiners to suspend it.
In Massachusetts, voters re-elected Governor Deval Patrick, who survived a challenge from a candidate who questioned the state's membership in the 10-state Regional Greenhouse Gas Initiative, or RGGI. It is the country's first regional cap-and-trade program. In New York, which also holds membership in RGGI, Democrat Andrew Cuomo won the governor's race over an opponent who had called global warming a "farce."
Backers hope eventually the two programs will provide the basis for a national market that can link up with global carbon markets to would slash emissions and spark innovation in alternative energy.
Below are comparisons between California's program and RGGI.
HOW THEY WORK
The two programs force polluters to trade an ever-decreasing number of permits to emit gases. In theory, the cap-and-trade market forces will drive efficiency and innovations in clean energy.
WHEN PROGRAMS LAUNCHED
-California passed a climate change law in 2006. Carbon trade is slated to launch in 2012.
-Cap-and-trade is already running in RGGI where the first quarterly sale of emissions permits in the program occurred in September 2008.
WHAT PARTS OF ECONOMY THEY COVER
-The California plan would cover economy-wide emissions, from power plants, manufacturing and, in 2015, transportation fuels.
-RGGI covers carbon dioxide emissions from power plants.
-California is also a member of the Western Climate Initiative, which, includes seven U.S. states and four Canadian provinces. The group expects to launch carbon trade in 2012 with a core group of California and some Canadian provinces. Mexican states are also observers.
-RGGI would like to expand to other states, but that could be hard in tough economic times and with Republicans gaining ground in state legislatures.
-The California climate change law would cut the state's emissions to 1990 levels by 2020.
-The goal of RGGI is to cut carbon emissions from power plants by 10 percent from about 2008 levels by 2018.
HOW EMISSIONS PERMITS ARE DISTRIBUTED TO POLLUTERS
-California would give away most of its credits to polluters in the early years of the plan. Carbon brokers said the giveaway was necessary as requiring polluters to buy the credits at first would be a deal breaker during tough economic times.
-RGGI auctions most of its credits. The auctions have raised nearly $730 million so far for clean energy and efficiency programs, though governors in New York and New Jersey have raided the funds to help push down state deficits.
-California's plan to give away most of the emissions allowances at first and allow plentiful trade in credits for 'offsets,' such as planting trees that soak up carbon, could keep prices weak and demand low for years.
-RGGI states want to strengthen their program to reduce emissions further and bring up the price on carbon, which has fallen to the minimum price of $1.86 a short ton. RGGI leaders also would like to help spur the development of charging platforms and other infrastructure for electric cars. These efforts could be a challenge in a tough economy.
(Reporting by Timothy Gardner and Peter Henderson in San Francisco; Editing by Lisa Shumaker)