SAN FRANCISCO (Reuters) - A California appellate court has ruled that state regulators can proceed with plans to implement a carbon cap-and-trade system, a decision that puts them on track to launch the market as scheduled in January 2012.
The ruling by the California First District Court of Appeal late on Friday is the latest chapter in a months-long legal battle over plans by the state Air Resources Board to establish a carbon market to help California's biggest greenhouse gas polluters reduce emissions to 1990 levels by 2020, as required by state law.
A San Francisco Superior Court judge on May 20 ordered state officials to halt work on the planned market, but the regulator was successful in getting a temporary stay on that order from the appellate court in early June.
In its ruling on Friday, the court granted a state request that regulators be allowed to continue work pending the court's decision. The lower court ruled that the state had failed to adequately analyze alternatives to a carbon market when it approved a statewide greenhouse gas reduction plan in 2009.
A source with the appellate court said it could take well over a year before the busy court weighed in on the matter, which should give state regulators enough time to complete work on the details of a carbon market this year, lawyers said.
"Absent any further appeal or development, this means that California is permitted to continue work on its cap-and-trade program while the appellate court hears the full merits of the state's appeal of a lower court's decision," Cara Horowitz, an attorney with the UCLA Emmett Center on Climate Change and the Environment, said on Friday.
Horowitz said that while the state is in "better shape" to meet its start date, it is "by no means certain" it will meet the aggressive timeline it has set for itself.
The regulators had planned a series of key market design release dates and public stakeholder meetings throughout the course of the year.
Key decisions, including how to allocate billions of dollars worth of pollution permits to utility companies and how to use revenue raised from the auction of those allowances, have yet to be made.
The Air Resources Board has said the cap-and-trade system will be responsible for about 20 percent of the state's overall emissions cuts required to meet the 2020 target.
A cap-and-trade system typically allows firms emitting more carbon dioxide than the limit to buy credits from those that emit less.
(Editing by Paul Simao)