– John Kemp is a Reuters market analyst. The views expressed are his own —
Efforts to implement cap-and-trade programs at state level are faltering, just as policymakers in Washington are struggling to generate enough support to put in place a comprehensive national system.
Recent setbacks in California and Arizona point to growing headwinds against the policy. As cap-and-trade loses momentum and becomes embroiled in bigger political disputes about the size and role of government, opponents are becoming emboldened to try to block the policy completely.
Carbon market supporters have repeatedly expressed the hope that state and regional initiatives can provide at least a temporary substitute as hopes for a national program have dimmed in the wake of last year’s failed summit in Copenhagen and a string of election defeats that have thrown the progressive wing of the Democratic Party onto the defensive.
But the same factors that undermined support for a nationwide program, especially concern about the near-term costs and adverse impact on employment when the economy is only just starting to recover from deep recession, are dimming enthusiasm at state level as well.