Will carbon trading prevail as states work to comply with the Clean Power Plan? On today's The Cutting Edge, ClimateWire reporter Elizabeth Harball discusses the details of a new ClimateWire review of high-level state planning discussions on the power plan.
Monica Trauzzi: Welcome to The Cutting Edge. Will carbon trading prevail as states work to comply with EPA's Clean Power Plan? Elizabeth Harball joins me today with details on a new ClimateWire review of state discussions on power plan compliance.
Elizabeth, you have a fantastic piece running in Tuesday's ClimateWire --
Elizabeth Harball: Thank you --
Monica Trauzzi: -- that digs into the future of carbon trading as part of compliance with the Clean Power Plan. You and our colleague, Emily Holden, have taken a close look at high-level planning discussions that are happening on the state level. What did you find?
Elizabeth Harball: Well, we've been following discussions about carbon trading for many months now, but we took a step back lately and looked at discussions. We looked at our interviews. We looked at some public record requests we've made, and we found that in at least 20 states there's a strong push by either officials or power companies in favor of carbon trading.
For example, in North Carolina you have politicians who are definitely against the Clean Power Plan. They're fighting it in every way they can, but also in North Carolina you have Duke Energy who has come out and said, "If we are going to have to comply with EPA's emission reduction requirements, carbon trading is how we want to do it."
Monica Trauzzi: So what is it about markets that make this such a compelling option to states?
Elizabeth Harball: Well, economic analysis generally finds that carbon markets would be the cheapest way for many states to meet their emissions reductions targets. Also, frankly, it's the way that a lot of coal plants are going to be able to stay open.
Utilities are also used to trading. They've been doing it for a while. An example is the acid rain program.
Then finally, it's important to note that we're not talking about an embrace of carbon trading from a lot of people. North Dakota's a great example. Their governor and a lot of their power companies are saying, "Look, we hate this rule. We think it's illegal, but if it survives, carbon trading is the only way we're going to get there."
Monica Trauzzi: Any surprises among states who you found are having discussions about trading?
Elizabeth Harball: Arizona has been really interesting. They're fighting the rule in court, but Emily Holden watched a discussion they had recently where the DEQ came out and said to all the stakeholders in the room, "We want to get going on our compliance plan, and we are leaning heavily on a trading-ready plan to submit to EPA."
Another caveat. EPA has laid out a menu of options for states. Carbon trading systems are among those menu items, if you will. The carbon trading systems don't necessarily mean that one state can trade with another state. There's different systems.
So what experts are telling us that might happen at the outset of the compliance period is you might have a patchwork of carbon trading systems across the United States. Maybe down the line that patchwork might coalesce, but probably not initially.
Monica Trauzzi: This could also potentially make the rule a bit more politically palatable if markets are involved.
Elizabeth Harball: That's a really interesting question. I guess carbon trading could make the rule cheaper. One of the big criticisms is that the Clean Power Plan might be expensive. However, as I've said before, cap and trade, carbon trading, those are politically charged terms. We have Republicans in Congress calling the Clean Power Plan a backdoor cap-and-trade system already.
So interestingly enough, we've heard some experts tell us that if the Clean Power Plan means that you end up with these carbon trading systems, many years down the line, if something like cap and trade or even an economywide national carbon trading system ends up before Congress, the Clean Power Plan might make it have the ability to gain traction. That's many years down the line, but it's an interesting possibility that's come out.
Monica Trauzzi: Thanks for coming on the show, Elizabeth. Great reporting by you and Emily, and the story is running in Tuesday's ClimateWire. We'll be looking for it.
Elizabeth Harball: Thanks so much.
Monica Trauzzi: Thanks for coming on the show. More Cutting Edge coming next Friday. We'll see you then.
[End of Audio]