Sonoma: Beyond cap-and-trade

By Glen Martin

If the Cal researchers consulting on Sonoma’s sustainability initiative have their way, the project will shift the greenhouse gas reduction focus away from a free-market approach known as cap-and-trade to more localized, technology-based fixes.

Under cap-and-trade, companies or agencies that produce carbon emissions would be granted credits for their greenhouse gas production, though they ultimately would be required to reduce their carbon releases to meet a “cap,” which would be lowered over time. As producers curtail their greenhouse gas emissions, they could find they have more allowances than they require. These carbon credits could be traded or sold to other emitters at a profit. Similarly, companies that find it too expensive to meet emission reduction goals could purchase allowances from producers with spare credits. Cap-and-trade advocates say maximum atmospheric carbon reduction thus is achieved at minimal cost. Significant cap-and-trade incentives are included in the Lieberman-Warner Climate Security Act, which is pending—some would say languishing—in the U.S. Senate.

But if cap-and-trade has besotted lawmakers and free market advocates, it has left climatologists and energy specialists cold. Michael Hanemann and Margaret Taylor, for example, favor Sonoma’s approach, which looks to reduce carbon through a blend of technologies rather than by cumbrous legislative fiat. Hanemann acknowledges cap-and-trade worked fairly well for cutting sulfur dioxide (SO2) and nitrogen oxides (NOx), the primary compounds driving acid rain. But greenhouse gases—not just carbon dioxide (CO2), but also methane and nitrous oxide (N2O)—are an entirely different matter, he says. “The relative success we saw with acid rain is what’s driving this infatuation with cap-and-trade,” Hanemann says. “But controlling CO2 and SO2 are two different propositions.” Gases associated with acid rain originate almost entirely from coal-fired power plants. You can install efficient scrubbers on such plants, significantly reducing the amount of SO2 and NOx emissions and freeing up credits for trading. Greenhouse gases, on the other hand, are diffuse. Carbon dioxide is produced by the nation’s millions of cars, by forest fires and home fireplaces, as well as by power-generating plants; methane comes from decaying vegetation and from livestock; nitrous oxide is released when agricultural fields are plowed. “About two-thirds of the emissions causing acid rain in the eastern U.S. came from a few hundred coal-fired power plants,” he says. “We got dramatic results by addressing relatively few sources. There is simply no analogue when you’re trying to get a handle on greenhouse gas emissions.”

Plus, says Michael Hanemann, the scrubbing technology for CO2 isn’t as efficient as that used for SO2 and NOx. “You can just stick the scrubbers on the end of the pipe for SO2 and NOx,” he says. “Not with CO2. It costs as much to retrofit an existing power plant to remove carbon as it does to build a new plant.”

Margaret Taylor, who teaches policy analysis at the Goldman School, specializes in the study of cap-and-trade, and agrees with Hanemann that the process is inappropriate for greenhouse gas reduction. Given the severity of the global warming crisis, she says, cap-and-trade simply doesn’t go far enough.

“Cap-and-trade picks the low-hanging fruit, but once the targets—which are usually quite modest—are met, technological innovation stops,” she says. “There is no incentive to move beyond the caps, and we’re going to have to do that if we hope to mitigate some of the extremely serious effects we’ll see from global warming.”

The Sonoma initiative makes a lot more sense than cap-and-trade, she claims: Unlike the one-basket-for-all-eggs approach of cap-and-trade, Sonoma offers a broad-based strategy, ranging from hybrid plug-in cars to geothermal heat pumps to “carbon bank” tree plantations. “This kind of local approach just seems better suited to dealing with the problem,” she says. “Unlike cap-and-trade, it doesn’t assume there is only one way to go. With the Sonoma initiative, it’ll be easier to fine-tune the feedback mechanisms, to figure out which approaches are better than others.”

From the September October 2008 Sustainable Blueprint issue of California.
Filed under: Science + Health
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