Will Proposition 26 Derail California's Carbon Cap-and-Trade Market?
11/26/2010

Summary:

Stoel Rives attorney Seth Hilton discussed in SNL Electric Utility Report the likely impact of the recently passed California Proposition 26 on plans to set up a carbon allowance trading market in California. Proposition 26 requires that certain state and local fees be approved by a two-thirds majority in the California legislature. The California Air Resources Board ("CARB") is currently in process of implementing a California renewable portfolio standard and a carbon cap-and-trade market.

Hilton said the biggest issue with Proposition 26 centers on the question of whether the sale of carbon allowances under a California cap-and-trade system would be considered a tax. If classified as a tax, a two-thirds vote in the legislature would be required before CARB could proceed with its first scheduled allowance auction in 2012. Hilton added that litigation surrounding Proposition 26 and the implementation of CARB's cap-and-trade system was likely, with large greenhouse gas emitters now in position to use Proposition 26 as a potential vehicle to derail the program.

"Proposition 26 could derail California cap-and-trade market" was published by SNL Electric Utility Report, November 22, 2010.