Everyone is looking to California for the future of the
Green House Gas Issue, Cap-and-Trade System included. A new report from Deutsche
Bank AG indicates carbon credits in California should hover in the $15-$60 per ton
range between 2012 and 2020.
Deutsche Bank analysts studied the prospects for a
California carbon market under the state's global warming law, A.B. 32, and
predicted relative success if emitters are allowed to meet 10 percent of their
obligation with offsets. Prices should stay stable as well.
The goal for California? Cutting greenhouse gases (GHGs) to
1990 levels by 2020. They would need to go with a cap-and-trade design for a
sizable percentage of the cuts.
California regulators at the state Air Resources Board
released a plan that proposes mixing:
- Cap-and-trade market
- Direct regulation for some
sectors
- More aggressive renewable
electricity standard
For their part, analysts at Deutsche Bank appeared to
express support for the California plan in the report released last week.
California's GHG emissions are on track to reach 596 million tons of carbon
dioxide equivalents by 2020, but A.B. 32 decrees a cut to 427 million tons -- a
goal Deutsche Bank lauded as in line with Europe's similar targets.
"This target implies 2020 per-capita GHG emissions of
9.9 tons in California, very similar to the E.U.'s implied per-capita target by
this date of 9.3 tons," the report says.
The scoping plan, in turn, implies a range of $15-$60 per
ton for carbon credits, but only if offsets are capped at 10 percent, the
report says. If the limit on offsets is tighter, the analysts wrote, this will
drive carbon prices higher (and wider) than assumed in their report.
Companies that will be affected by this new system should
start making plans now – finding out what their costs will be, implementing EHS
software, etc. it could be expensive for some of the worst polluters out there.
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