Sectors and Geographic Scope

Several parties see a need for a cap-and-trade program to include multiple sectors, not just the electricity sector, and/or be regional or national in scope. SDG&E/SoCalGas state that a diversity of emissions reduction opportunities would provide the least-cost approach and reduce market power concerns. GPI submits that only a regional approach can prevent abuses to California consumers, and that it favors a delay, if needed for development of a regional approach and a tracking system. The CAISO states that California's dependency on imported power raises doubts about the environmental integrity of a California-only trading system.

DRA states that a liquid market with broad participation is needed to minimize opportunities for market power activities and collusion. LADWP argues similarly that a cap-and-trade program must be robust and economy-wide in order to be successful. LADWP submits that it remains to be determined which sectors, other than electricity, can implement a market-based mechanism effectively. LADWP states that further evaluations are needed to determine if a California-only market-based system can be robust enough to resist market power and/or manipulation, gaming, credit hoarding, and other potentially negative impacts that could affect system reliability and price volatility. Absent such assurances, LADWP recommends that ARB postpone a market-based cap-and-trade program.