Will California's cap and trade stifle low-carbon innovation?

When the state of California recently launched the milestone auction of greenhouse gas credits under its AB32 cap-and-trade program, the environmental world  and forward-thinking companies  applauded.

The program's long-term certainty should provide confidence for investing in carbon-reducing projects, level the playing field across fossil fuel and low-carbon energy choices, and boost California's climate leadership. At Chevrolet, we are encouraged by California's pioneering, economywide effort.

But what if cap and trade inadvertently stifles the innovative spirit  especially in energy efficiency  and replaces it with a lowest-common-denominator compliance mindset? Could cap and trade actually then make it harder to build a broadly based low-carbon economy?

More specifically, could a carbon market structure that awards to upstream utilities the carbon reductions generated by downstream energy efficiency investors have the unintended consequence of reducing investment in innovative, energy-efficient enterprises, and discourage entrepreneurs in the clean energy tech sector? If so, is there a solution? We think so.

Chevrolet's carbon conundrum

Through our Carbon Reduction Initiative, Chevy was the largest investor in the U.S. voluntary carbon market in 2011. We will continue to be a significant investor at least through 2014 as we work toward our goal of reducing up to 8 million tons of greenhouse gases through investments across the U.S. in renewable energy, energy efficiency and other innovative carbon reducing projects.

We've spent significant time and resources trying to identify carbon certified energy-efficiency projects to invest in that would support local communities; build a cleaner, more efficient energy infrastructure; and potentially power Chevy's Volt and Spark electric vehicles.