Scholars and policy specialists from the U.S. and Canada convened at UCLA on March 31 for a symposium about the benefits and challenges involved in the linkage of California and Quebec‘s cap and trade programs.
Effective January 1 of this year, California and Quebec agreed to integrate and harmonize their cap and trade programs, creating a critical linkage between North American allies. Cap and trade is an approach for controlling greenhouse gas (GHG) emissions — the primary driver of global warming. Under this approach, greenhouse gas emitters are required to reduce their emissions or purchase emission allowances from others in a standardized market. Emitters may choose between reducing emissions or paying for the cost of lowering other’s emissions.
California is the only state in the U.S. with an economy-wide cap and trade program, and Quebec is the only province in Canada with such a program. Through the linkage of the two, regulated emitters in California and Quebec can buy and sell carbon emissions allowances and offsets in either jurisdiction.
Alain Houde, head of post, Quebec Delegation in Los Angeles said, “For a carbon market to be as effective as possible, it must include as many partners as possible. That is why we drafted the Quebec regulations in a way that allows linking our system with the systems of other provinces and states. The collaboration shown by Quebec and California is an excellent example of North American regional cooperation that is economically and environmentally beneficial for both partners.”
He added, “The carbon market is an important paradigm shift and the symposium at UCLA was a key event to explain and promote it, because we want other jurisdictions to learn from our experiences. It’s important that academics from both states discuss this new market and share their research with stakeholders.”
Keynote presentations were given by Jean Yves Benoit, director of Québec’s Climate Change Office Carbon Market Division, and California Air Resources Board’s Michael Gibbs. Both described why their governments embarked on cap and trade programs and what it took to establish the linkage. Benoit said that the linkage was important to Quebec because it, like California, benefits from broadening the range of regulated emissions sources, including those from cars, trucks, buildings (e.g. heating and ventilation systems), and industrial sources. Gibbs pointed out that any market is susceptible to fluctuations because of extreme weather and having a partner with very different climate conditions was a stabilizing force for a healthy market.
Panels throughout the day addressed the economic effects of the linkage, its implementation challenges and opportunities, and its potential to spur new cooperative efforts to control climate change across jurisdictions.
Economists included Professor J.R. DeShazo of the UCLA Luskin School of Public Affairs, Professor Bernard Sinclair-Desgagné of the HEC Montreal Department of International Business, and Matt Kahn, a professor of economics at UCLA. Each discussed the economic, political, and social benefits and potential detriments of linking markets. Kahn described California and Quebec as “green guinea pigs” and spoke about Assembly Bill 32, California’s Global Warming Solutions Act, which set the state’s 2020 greenhouse gas emissions reduction goal into law. Kahn elaborated on the economic cost of achieving a low carbon economy and emphasized the importance of realizing ongoing economic growth while reducing our economy’s carbon intensity.
A panel of lawyers and regulators who have worked closely on the linkage, including Gibbs, Benoit, J.P. Brisson of Latham & Watkins, and Danny Cullenward of U.C. Berkeley, delved into implementation challenges and the reactions of regulated entities.
The final panel addressed how the California and Quebec linkage might encourage other states, provinces, and countries to connect and build a strong network of subnational climate policies. Université de Montréal’s Erick Lachapelle spoke about the need for more robust public support and understanding of cap and trade. Mark Jaccard of Vancouver’s Simon Fraser University reviewed the diversity of climate policy across parts of Canada, noting that “while the current government is not proceeding with a climate mitigation scheme now, it would probably follow suit if the U.S. adopted one.” Mark J. Wenzel, climate change advisor for the California Environmental Protection Agency, and Erica Morehouse of the Environmental Defense Fund both discussed the state’s efforts to reach out in the U.S. and abroad for alliances and cooperation. Wenzel cited the Pacific Coast Collaborative as one outcome of this work—an action plan between the Governors of California, Oregon, Washington, and Premier of British Columbia. Wenzel also described outreach efforts in China, Mexico, Peru, and the Netherlands which could result in new linkages.
All of the presentations from the day are available here. Some will lead to papers to be published in an upcoming issue of the UCLA Journal of Environmental Law and Policy.
This symposium was sponsored by UCLA’s Canadian Studies Program, Emmett Institute on Climate Change and the Environment, Institute of the Environment and Sustainability, and Luskin Center for Innovation. Additional support for the event was provided by the Canadian Consulate in Los Angeles, the Government of Quebec, and the California Air Resources Board.