California governor green lights carbon market link with Quebec

California governor green lights carbon market link with Quebec

Plans to allow businesses in California and Quebec to trade carbon allowances across the border have taken a step forward, after California Governor Jerry Brown approved the proposed tie-up.

Brown sent a letter this week to the California's Air Resources Board (CARB) confirming it had met all the minimum requirements to share its emissions trading platform with the Canadian province.

California and Quebec have spent more than five years developing compatible emissions trading schemes that will allow more than 350 companies in the U.S. and 75 firms in Canada to buy and sell interchangable emissions permits.

Under California state legislation, however, the governor must approve CARB's plans before it can tie the state's new emissions trading scheme with any other jurisdiction.

The state now will be able to link the two carbon markets by January, according to Brown's letter.

CARB now has until November to file a report confirming how it will test the integration of the two schemes with the Quebec Ministry of Environment.

But experts last year warned that the two markets should only link up once both are well established, which might not be until 2015.

Stanley Young, a spokesman for CARB, told Bloomberg that it was pleased with the ruling and now will work on the next steps to ensure a successful link-up.

California launched its trading platform six months ago, with the latest auction selling out of permits for 2013 at a level almost $3 above the reserve price.

Meanwhile, Quebec aims to cut greenhouse-gas emissions to 20 percent below 1990 levels by 2020 using its emissions cap-and-trade program. After initially distributing allowances for free, it will sell the remainder at $10.70 per ton, almost matching California's reserve price of $10.71 per ton.

This article is reprtinted with permission from BusinessGreen.

Photograph of California Governor Jerry Brown provided by Randy Bayne via Flickr.