In November 2012, California’s Air Resources board auctioned off the first round of carbon permits for its voluntary cap-and-trade market, which officially went live on January 1, 2013. This initiative came out of California Assembly Bill 32, the Global Warming Solutions Act, which sets a goal of lowering greenhouse gas emissions to 1990 levels by 2020 (a reduction of about 30 percent).
Under this regulation, polluters can meet their emissions reductions through three options: reducing emissions, trading emissions allowances or using offset credits for emissions reductions outside of the cap. California is the first state to have a cap-and-trade market for greenhouse gases in the United States. Many policymakers are looking to the state’s market as a test for a national model.
Cap-and-trade markets, however, are not the solution to emissions reductions that they pretend to be. They do not produce real reductions in greenhouse gas emissions and pose serious problems for common resource management. The privatization and financialization of nature is synonymous with these markets, and the numerous opportunities for corruption further weaken their legitimacy as real solutions for reducing emissions. In particular, the use of offsets poses significant problems in California’s new market.