Framework for Protecting Community Interests When Designing Market-based Mechanisms for Green House Gases Emissions Reduction

Background Many people suggest that a market-based compliance mechanism is a critical part for the overall Green House Gases (GHGs) emission reduction strategy. The Global Warming Solution Act [AB 32] authorizes the California Air Resources Board (ARB) to adopt market-based compliance mechanisms. The Market Advisory Committee (MAC) of national and international experts convened per the Executive Order made recommendations to ARB on the design of a market-based compliance program that permits trading with the European Union, the Regional Greenhouse Gas Initiative and other jurisdictions. The MAC recommended that a “Cap and Trade Program” be considered as the primary market mechanism and acknowledged that: a) “Carbon-tax” can also achieve similar results; and b) Environmental Justice concerns raised by many committee members and members of the public are true and need to be addressed in the design phase of a market based program.