Explainer: California’s New ‘Cap-And-Trade’ Scheme to Cut Emissions

Last month, California’s politicians agreed a new cap-and-trade bill to help curb the state’s emissions.  This week, governor Jerry Brown signed it into law, representing a major step forward in the state’s effort to combat climate change.

“Cap and trade” requires large emitters such as power plants, refineries and factories to buy permits for the greenhouse gases they release.  Distributors of natural gas, gasoline, liquid petroleum gas, and diesel fuels must cover emissions from fuels they sell.  The scheme limits the total number of permits available so that overall emissions stay within the cap.

California, one the US’s largest emitting states, has committed to reduce its emissions to 1990 levels by 2020, to 40% below 1990 levels by 2030 and to 80% below 1990 levels by 2050.

While it is on track to meet its 2020 goals, California’s reductions will have to ramp up dramatically to meet its 2030 and 2050 targets.  The new cap-and-trade system is expected to play a major role in meeting these ambitious targets.

Here, Carbon Brief explains how the scheme will work.

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