On Thursday, the California Air Resources Board (CARB) voted 9-1 to adopt a cap-and-trade program for greenhouse gas (GHG) emissions that is scheduled to start in 2012. The program will affect power plants and other industrial facilities that emit carbon dioxide.

The program was created in response to AB 32, the Global Warming Solutions Act of 2006, whose scoping plan identifies a cap-and-trade program as one of the strategies California will employ to reduce the GHG emissions that cause climate change. This program is expected to help California meet its goal of reducing GHG emissions to 1990 levels by the year 2020, and ultimately achieving an 80% reduction from 1990 levels by 2050. An overall limit on GHG emissions from capped sectors will be established by the cap-and-trade program and facilities subject to the cap will be able to trade permits (allowances) to emit GHGs.

The Wall Street Journal reported that "Under the proposed cap-and-trade rules, the state would give away most allowances in the first few years of the cap-and-trade program, then sell many allowances in auctions in later years. Industries that could prove the regulations were putting them at a significant competitive advantage to companies in other states could be eligible for additional free allowances. The proposed rules would establish a floor on the price of allowances sold at auction of $10 per metric ton of carbon dioxide."

Although some news organizations reported that California was the first to approve a state-level cap-and-trade program, New Mexico approved a GHG cap-and-trade rule on Nov. 2. Public Service Company of New Mexico (PNM) filed an appeal on Dec. 14 to New Mexico’s cap-and-trade program, which state officials called the most comprehensive GHG pollution reduction regulations in the nation. PNM is questioning the Environmental Improvement Board’s authority to regulate GHGs. Southwestern Public Service, a subsidiary of Xcel Energy, also filed an appeal.

Sources: CARB, Wall Street Journal, ABCnews.com, POWERnews