President Barack Obama’s direction to the Environmental Protection Agency (EPA) to potentially allow California and other states to set their own regulations over tailpipe emissions signals his commitment to the implementation of a Cap-and-Trade program to reduce greenhouse gas emissions 80 percent by 2050.
California’s Republican Governor Arnold Schwarzenegger is behind the world’s first Low Carbon Fuel Standard (LCFS) for transportation fuels. The standard requires fuel providers to reduce the carbon intensity of transportation fuels sold in California. Schwarzenegger has pointed out that the standard, which establishes sustainable demand for lower-carbon fuels, would reduce the carbon intensity of California’s passenger vehicles by at least 10 percent.
In the meantime Republican Florida Governor Charlie Crist has signed an executive orders to implement California’s standards, in addition to promoting alternative energy initiatives. Further, Maryland Gov. Martin O’Malley (D) applauded Obama’s announcement. And in 2007, the Maryland General Assembly passed a so-called clean cars law that would set stricter emissions standards for vehicle models hitting the road in 2010. The law would eventually raise average fuel efficiency of cars sold in Maryland to 43 miles per gallon.
If State’s are allowed to implement their low carbon fuel standards, they could become part of an overall “Cap” in a Cap-and-Trade strategy. Under such a program Manufactures of cars and light trucks, along with other polluters, would be issued emission permits and credits which would represent the right to emit a specific amount.
The total amount of allowances and credits could not exceed the cap. Manufactures, or Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer is paying for polluting, while the seller is rewarded for having reduced emissions by more than needed. Thus, in theory, those that can easily reduce emissions most cheaply will do so. This helps achieve the pollution reduction at the lowest possible cost to society.
Regardless of the Cap-and-Trade potential, the President’s actions does start to resolve years of divisive debate over fuel efficiency requirements between those who want to reduce vehicle emissions and Automakers who would like uniform nationwide mileage standards while providing assistance and incentives for car buyers.
President Obama also addressed the mileage standards by instructing the Transportation Department to draw up new interim targets for mileage standards starting in 2012. This ensures that new vehicles will reach the 35 mile-a-gallon level set by Congress for 2020. He left intact the Bush administration guidelines for 2011 models already being designed.
Separately, the State Department named Todd Stern the new U.S. envoy on climate change. Stern, a partner in the Washington law firm of Wilmer Cutler Pickering Hale and Dorr and a senior fellow at the Center for American Progress think tank, served as the top White House negotiator on the Kyoto talks on global warming from 1999 to 2001.
California Government Web Site, “Schwarzenegger Applauds Florida for Adopting California’s Tailpipe Emissions Standards, Aggressive Environmental Protection Policies,” at: http://gov.ca.gov/issue/env-lcfs/
Griscom, Amanda, “Charlie Crist Superstar: An interview with Florida’s governor, a Republican climate crusader,” at: http://www.grist.org/feature/2008/01/14/crist/
Montgomery, W.D. “Markets in Licenses and Efficient Pollution Control Programs.” Journal of Economic Theory 5 (Dec 1972):395-418
Mufson, Steven, Eilperin, Juliet, Rein, Lisa, “Obama Issues Orders Toward More Fuel-Efficient Cars,” at: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/26/AR2009012602028.html?hpid=topnews
Sedam, Sean R., “Agreement imminent on global warming legislation: Bill would contain carbon reduction goals that failed to pass last year,” at: http://www.gazette.net/stories/01212009/silvnew183749_32481.shtml
Wikipedia, “Cap-and-Trade,” at: http://en.wikipedia.org/wiki/Cap_and_trade
Wikipedia, “Kyoto,” at: http://en.wikipedia.org/wiki/Kyoto_Accord