Industry advocates, such as the AB 32 Implementation Group, counter that the price is still too high. "The costs that will be incurred by California's regulated industries are alarming," says executive director Shelly Sullivan. "Consumers and taxpayers will ultimately pick up the tab in higher costs for electricity, consumer products, government services, or even college tuition.
"Cap and trade will work only if other states impose similar emission caps in their economies," she adds.
Legal experts have suggested that opponents could take cap and trade to court, arguing that it forces utilities in other states to live by California's rules when selling electricity in the state – a violation of the Constitution's commerce clause, they say.
2. Mandating lower-carbon gasoline
The commerce clause, which vests power to govern interstate commerce in the federal government, has already caused problems for AB 32. California's low-carbon fuel standard, the world's first, was enacted the year after AB 32. It aims to reduce the carbon content of gasoline. But it was ruled unconstitutional by a federal district judge on Dec. 29. US District Court Judge Lawrence O'Neill said LCFS discriminates against out-of-state producers.
The case has had a ripple effect. Of 18 states that were poised to follow suit, several – including Pennsylvania, New Jersey, Maine, New Hampshire, Washington, and Oregon – have now either backed off or are reconsidering.