International Law and Immigration

Ca. Int'l Law Journal SPRING 2014, VOL. 22, NO. 1

The California Cap-and-Trade Program’s Linkage with Quebec: An Application of Conflict and Field Preemption

By Annie Tsai*

I. INTRODUCTION

In 1997, the Kyoto Protocol ("Protocol"), a binding international agreement on greenhouse gas ("GHG") emissions that limited its signatories’ GHG emissions to predetermined targets, recognized a concept called the "Carbon Market."1 A Carbon Market defines a geographical jurisdiction, and provides an emissions target with the corresponding quantity of emissions allowances for regulated "Emitting Entities." A Carbon Market also offers a mechanism for those Emitting Entities which emit more GHG to trade with those that emit less. In other words, some Emitting Entities could buy the right to emit, while others with excess pollution credits could sell these rights for monetary gain. This mechanism is also known as "Cap-and-Trade."2

California Assembly Bill 32 ("AB 32"), the "California Global Warming Solutions Act of 2006," pursued a Cap-and-Trade program in 2011.3 AB 32 also provides the state agency in charge of implementation, California Air Resources Board ("ARB"), the authority to facilitate California’s GHG emissions reduction on an international scale.4In 2013, the California Governor made required findings that enabled ARB to solidify California and Quebec emissions markets’ linkage.5 On October 1, 2013, ARB and the Government of Quebec agreed to integrate and harmonize their Cap-and-Trade programs.6 Through collaborative market regulatory changes, participants within two distinct jurisdictions could potentially trade emissions credits.7

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