What will happen to U.S. carbon pricing under Trump?

The W. A. Parish power plant  in Fort Bend County, Texas. (Eric Kayne/Invision for NRG/AP Images)

The United States might not have a national carbon pricing system like Europe has and Canada and Mexico are developing. But it does have a scattering of regional carbon markets, in the northeast and in California.

With President Donald Trump in the White House, some are wondering whether the administration might act to undermine those regional markets in keeping with its pro-business, climate change-skeptic point of view.

Speaking at CERAWeek by IHS Markit Wednesday, Richard Newell, president of the Washington think tank  Resources for the Future, said he doesn’t think so.

“I don’t think they’re at risk,” he said. “California is very aware of its importance as a state. They’ve taken on the mantle of being a leader at the regional and local level and view themselves as an international voice on climate.”

So far carbon prices remain relatively low in both California and the northeast’s Regional Greenhouse Gas Initiative, which caps carbon emissions from the power sector across Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.

In RGGI, allowances are trading around $4 per ton, Newell said. By way of comparison, the Canadian oil company Suncor is factoring a carbon price of $60 to $65 per ton on new projects, said Arlene Strom, vice president of sustainability and communications at Suncor.

Carbon pricing, whether through a tax or cap and trade schemes, is gaining momentum worldwide following the Paris agreement on climate change in 2015.

Mexico is in the process of developing a carbon pricing system and is in discussions with both California and countries in South America including Chile and Peru about creating an integrated carbon pricing system, said Dirk Forrister, president of the International Emissions Trading Association.

“You can see this stream of countries forming a carbon system recognizing each other’s [carbon] units,” he said.

But it’s not all so upbeat. For example, last year voters in Washington state voted down a referendum to create a carbon pricing scheme there.

After Paris, “now we have it where every country is taking a stand,” said Kathy Benini, managing director at IHS Markit. “We just have to recognize its a lot of work to get there.”

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