California’s cap-and-trade program may be getting a makeover. This week, state senator Bob Wieckowski will introduce legislation for a new cap-and-trade program that would eventually set one of the highest prices for carbon dioxide in the world. Most of the revenue would be returned to Californians as “climate dividend rebates.” The proposal could serve as a model for other states and countries.
“This new post-2020 cap-and-trade program illustrates the California State Senate’s commitment to expanding California’s clean energy economy, protecting [the] health and welfare of Californians, and lowering pollution in all parts of the state,” Sen. Wieckowski said during a press conference on Monday afternoon.
The current system sets a rising price floor for greenhouse gas emission allowances, with the revenues allocated to green projects. In contrast, the proposed system would establish a “price collar” that sets both a floor and ceiling for the price of a metric ton of carbon dioxide. The collar would start at $20-$30 in 2021, rise to $20-$40 in 2022, and then increment upwards by $5 and $10 annually, respectively, plus adjustments for inflation.
The ceiling would exceed the price of carbon in most European nations right away. In the 2030s, it would also surpass Sweden’s carbon tax of around $150 per metric ton, which is the world’s highest carbon price.
Read the full article in MIT Technology Review.