California regulators have revised their analysis of alternatives to cap and trade in the wake of last month's court decision that found the groundwork for the nation's first economywide greenhouse gas trading system insufficient.

San Francisco Superior Court Judge Ernest Goldsmith's May 20 decision handed back the California Air Resources Board's cap-and-trade program, the cornerstone of its efforts to reduce emissions to 1990 levels by 2020. Environmental justice groups had sued over the market-based model, which they alleged would increase air pollution in some spots by allowing companies to buy their way to compliance.

Goldsmith originally ordered work on the cap-and-trade system to halt, but the 1st Appellate District of the California Court of Appeal stayed the injunction last week (ClimateWire, June 8).

The new version is significantly longer than the original analysis, which identifies five alternatives to the cap-and-trade program.

Since Goldsmith did not object to the number or type of alternatives in the original analysis, ARB staff simply expanded the discussion of each one. The new document is now out for public comment for 45 days, after which the ARB will vote in August on the overall "scoping plan," including the new alternatives analysis, that lays out the path to 2020 emissions levels.

ARB Chairwoman Mary Nichols said yesterday that the new analysis still favored cap and trade. "The analysis that led us to conclude that a cap-and-trade program was the correct alternative choice is fundamentally sound, and I think that this document lays that out quite clearly," Nichols told Reuters.

But legal observers said that it could be construed to support other actions, including fees and direct regulation. "[T]he supplemental environmental document provides the board with the legal basis for moving forward with cap and trade, but could also provide the board with an alternative approach that would mix cap and trade with fees and some direct regulation," Ann Carlson, a law professor at the University of California, Los Angeles, wrote in a blog post.

Kahn reported from San Francisco.