California’s cap-and-trade system may be too weak to do its job

California is regarded as a global leader on climate-change policy, having put in place some of the world’s most ambitious carbon-reduction targets. Most recently, it extended its landmark climate law from 2020 out through 2030, drawing international praise and signaling that the state would stay on the path of decarbonization.

But now comes the hard part: implementation. California must design and implement a system of emission reductions that can meet its aggressive 2030 target. If it doesn’t, all the hype will have been for nothing. If it designs a system that fails, California will go from an inspiration to a cautionary tale.

And beneath all the happy talk, behind the scenes, there are troubling signs that the system California regulators have proposed will not be up to the task. At every juncture, the state’s oil industry has had enormous influence on program design. The result is a system fated to underperform.