In the West, GOP Governors, Skeptical of Cap-and-Trade, Will Watch California

SCOTTSDALE, Ariz — Utah Governor Gary Herbert is skeptical about the viability of large-scale carbon trading in the United States, but says he is “absolutely” watching as California continues rolling out its unprecedented two-week-old cap-and-trade system.

Should California’s experiment work, states should take note, he told Stateline Sunday (December 2). If it fails, “we’ll be able to check that off the list.”

That’s the beauty of state policy, Herbert said, “These are the laboratories of democracy. (California) can experiment and not jeopardize the rest of the country.”

Herbert made those remarks here at the winter meetings of the Western Governors Association, a group he chairs. Over two days, meetings open to the press were dominated with talk about how states can unleash the full potential of the West’s vast slate of energy resources — oil, natural gas, wind, solar and geothermal.

The governors largely called for more collaboration between the states and a better working relationship with the federal government, whose red tape, they say, often hinders development. There was also plenty of discussion about how the parched region could respond to a year of record drought and wildfire that’s devastated wide swaths of land.

But the mostly Republican governors at the meetings made few direct references to climate change, the phenomenon most scientists believe is exacerbating those conditions. Stateline asked several governors about the role of climate change in that discussion and California’s new experiment with large-scale carbon trading.

California’s new program, which began this month, allows industries to bid on rights to emit greenhouse gases into the air. It’s expected to generate $660 million to more than $3 billion each year, according to the state’s Legislative Analyst’s Office — money the state will presumably put toward other projects to help the state reduce emissions further. Some experts predict the program could yield billions more annually as it expands.

It’s not the first carbon trading system in the U.S. Nine New England states make up the Regional Greenhouse Gas Initiative, a pact that auctions pollution rights among utilities. But California’s project is far broader, applying to greenhouse gas emitters across the economy. 

Dan Reicher, executive director of Stanford University’s Center for Energy Policy and Finance, said state and federal policymakers would be wise to keep an eye on the experiment.

“California is an important testing ground for cap-and-trade” and whether the model could work nationally, he said. “We’ll finally be getting real-time information.” That data’s coming from a huge state that makes up more than 12 percent of the country’s population.

But Herbert and his fellow Republican governors at the meeting aren’t banking on the program’s success.

“A lot of people are a little skeptical,” Herbert said. “They look at the European (cap-and-trade system). It doesn’t get the results promised.”

Indeed, European Union’s carbon market has been sullied by fake offsets, credits for companies can earn for measures to reduce emissions, such as planting trees. European regulators have struggled to audit those credits, a reality not lost on regulators in California.

Idaho Governor C.L. “Butch” Otter said he might not wholeheartedly object to a national cap-and-trade scheme if states could opt in or out.

“If what they came up with fit Massachusetts but not Idaho, that’s something I’d want to avoid,” he said.

But Otter and the other governors said they aren’t convinced that climate change is something policy can properly attack, or at least it’s not the top priority in itself. In the case of wildfires, for instance, the bigger problem is federal forest management, Otter said.

“I don’t know if any of us disagrees that there’s climate change,” Herbert said. “The question is, what is man’s impact on climate change?”

Wyoming Governor Matt Mead said climate science isn’t settled. “I fundamentally disagree with those who say the debate is over,” Mead said. “But we can’t decide policy out of ignorance.”

Regardless, Mead said, energy policy should always factor in environmental concerns, especially in the West, where economies are largely dependent upon tourism.

Mead, echoed by Alberta Premier Alison Redford, said policymakers should think about global impacts when it comes to emissions policy. Reducing coal consumption in the U.S., for instance, could spur U.S. coal to head to China, said the Wyoming governor, whose state produces 40 percent of the nation’s coal.

China emits nearly a quarter of the world’s carbon — far more than the United States, which sits around 18 percent.

“Coal’s going to be burned elsewhere,” Mead said.