California dipped its toe into the cap-and-trade water and found it to be neither too hot nor too cold.
Air Resources Board chairwoman Mary D. Nichols proclaimed the first auction of carbon allowances to be a success. Numerous environmentalists who want cap and trade to succeed also praised it.
But in reality, the first live auction conducted last week and assessed this week was like taking a test drive in an alternative fuel vehicle. Maybe it will fit California's needs. Maybe it won't.
Nichols and others said the goal of cap and trade, in which polluters pay to offset their carbon emissions, is not to generate money for the state.
But by that one measure, the auction fell short. Gov. Jerry Brown and legislators had hoped to receive $500 million from cap and trade for this fiscal year. However, the first auction raised about $55 million for the general fund. Corporations and other entities that pollute paid only nine cents above the bare minimum $10 bid set by the Air Resources Board.
There will be two more auctions before the end of the fiscal year. But it's hard to imagine that the auctions will generate the full $500 million in the first year.
The more fundamental question is whether cap and trade will combat climate change. That, after all, is the point of Assembly Bill 32, the 2006 law that requires greenhouse gas reductions and the statute cited by the air board as giving it authority to create the cap-and-trade system. The answer to that is hazy.
California cannot reverse climate change on its own. If cap and trade is going to be effective, the state must find partners other than Quebec, its current partner.
Oregon Gov. John Kitzhaber, a Democrat, praised California's cap-and-trade auction in a speech to the U.S. Green Building Council in San Francisco last week. But he offered no indication that his state might join in the experiment. Nor is Washington state rushing to sign up, even though Democrats are in control there, too.
President Barack Obama said at his postelection news conference that he intends to focus on climate change in his second term. But he offered no specifics, vowing merely to take the action of "having a conversation a wide-ranging conversation" to determine how to "make short-term progress." How's that for taking a bold stand?
Obama hastened to add that he won't take steps that risk damaging the economy. We'd count Obama as unlikely to push to create a national cap-and-trade system.
California's foray into cap and trade produced nothing bad, which is good. Slick energy traders didn't game the system. No one hoarded carbon allowances. Because the price was relatively low, the cost to individual corporations will not have been huge. All that may boost confidence in the system and give reason for other states to join in.
But the question remains: Did California's cap-and-trade auction help in any significant way reduce greenhouse gas? That's not clear.