California environmental regulators running the nation's first economy-wide carbon cap-and-trade program defeated a lawsuit that claims the system contains a loophole so companies can avoid reducing carbon emissions.
State court Judge Ernest Goldsmith in San Francisco rejected a lawsuit by two environmental groups challenging the way the program allows polluters to buy greenhouse gas emission credits from entities that aren't part of the program.
“The court's decision is welcome news for one of California's most important clean energy and clean environment regulations, and provides a bright green light for further investment in pollution reduction projects,” Timothy O'Connor, an attorney for the Environmental Defense Fund, said today in an e-mailed statement. The defense fund sided with state regulators in the case.
Two environmental groups sued California's Air Resources Board claiming the offsets are a loophole because the projects aren't new efforts to lower carbon and would occur even without investments from polluters. The complaint sought a court order repealing and invalidating the offset program and prohibiting the state from using offsets as a compliance instrument in the cap and trade program.
State rules prohibit the creation of offsets from ongoing projects and require that credits be given only for carbon reduction beyond what “otherwise would occur,” George Hays, a lawyer for the groups, told Goldsmith at a December 7 court hearing.
If the air resources board “doesn't ensure the offsets are really additional, you don't get reductions,” said Hays, adding that the offsets undermine the program's goal of getting companies to reduce their own emissions.
Hays declined to immediately comment on the January 25 decision.
The cap and trade program is a key component of California's 2006 global warming law, which aims to reduce emission to 1990 levels by 2020.
California Deputy Attorney General Gavin McCabe told Goldsmith that the law gives the air resources board wide discretion to decide which type of offsets should be part of the program. The environmental groups are free to challenge individual offset projects they think don't adhere to state rules, he said.