California in the next half-decade will face a similar challenge the European carbon market faced, but with a better outcome and better reason for it.
Future emissions are now projected to be lower than anticipated under the cap and trade program, and with many allocations given freely, the price of allocations to be auctioned could have been at risk. However, unlike the European system, California included a price floor. That floor increases over time, as does the percentage of allocations auctioned instead of those wasted on giveaways. These steps together with a gradual tightening of the overall cap will keep the market functioning. This is happening in large part just because the Europeans went first and we learned from them. The European system could be improved, as could California's, but having problems that others learn from doesn't make their system a failure.
One reason why emission projects are low is that cap-and-trade is only one part of California's system to reducing emissions. Per the link above, regulations affecting renewable power and carbon fuel standards are eating into overall emission levels. In effect, the system has a certain redundancy with cap-and-trade backing up other components - again, that's not a showing of weakness. I don't know if it's the policy-optimal design, but it beats nothing, regardless of Naomi Klein may have to say.
Maybe in a few years we'll have the political willpower to enact improvements. A recent poll showed 79% of Californians think global warming is happening. Of them, 71% are very sure or extremely sure it's happening (p. 20). I don't like how they did the follow-up question of what's causing the warming (p. 11), however. They asked all respondents to assume warming was happening and then asked whether humans or nature are the cause. They should've asked only the ones who accept it as happening, so we can see what percent believe there's a problem and humans are the cause, as they'd be likely supporters of actions to address climate. It's a shame that only 55% think there's a scientific consensus (p. 22) - seems like there's an information deficit among those who should be receptive to the concept that a strong consensus exists out there in support of their own beliefs.
Other datapoints: some 68% support more renewable power even if it costs the average family $100/year, and the public is evenly split on fracking (p. 37). I was really hoping for age breakdowns so I could chortle, but that wasn't provided.
I generally take specific poll numbers with a grain of salt, but trends over time seem more credible. Hopefully they'll repeat the poll over the next few years.