E&E Climatewire reporter Jennifer Hijazi quotes me in a story on the federal government’s lawsuit against the link between cap-and-trade programs in California and Québec:
Cullenward said he expects that even if courts rule against the agreement, the case would not have a major impact on the individual cap-and-trade markets in California and Quebec. He noted that the individual programs can stand on their own — even in the absence of an agreement linking the markets.
"Setting aside the disruption and the uncertainty and the political vindictiveness of this lawsuit, there's not a lot about the markets that doesn't work in isolation if each of them were operating on their own," he said.
That’s not an accident, but rather a reflection of the fact that subnational governments can’t bind one another to legal commitments in linked markets. Under those conditions, the only realistic market links involve programs that are fairly similar to one another to begin with. Anything else risks major political and financial investments on the back of a legally unenforceable form of cooperation.