The EPA has identified carbon as a pollutant and a "carbon credit" market has been designed to fund efforts to reduce carbon pollution. California, known for chronic budget shortfalls, was the first state to jump into the carbon market. Lawmakers and environmentalists envisioned billions of income to plug chronic budget gaps and fund special programs fighting climate change.
As noted in the article from the Sacramento Bee, initial projections of income are falling short.
Like the "derivatives market", the "carbon credit market" is fiction. The implosion of derivatives resulted in economic chaos. With auction income falling short of projections, is this another economic calamity in the making?
--Sacramento Bee article--
State environmental leaders this week hailed California's first auction of carbon emissions credits a huge success.
But budget writers are hardly thrilled.
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A low price for credits and minimal demand for future offsets suggest California will see a mere fraction of the $1 billion that Gov. Jerry Brown and lawmakers estimated the state would receive this fiscal year.
If demand remains similar in two forthcoming auctions, the state would generate only about $140 million, the nonpartisan Legislative Analyst's Office estimated Wednesday.
That would strain the $91 billion state budget and disappoint environmentalists who wanted to spend the money on efforts to reduce pollution and improve energy efficiency.
"The likelihood of there being a hole in the budget has increased," said Tiffany Roberts, an LAO analyst who focuses on climate change issues.