California Climate Scoping Plan
California Air Resources Board Plan to Implement AB 32
On October 15, 2008, the California Air Resources Board (CARB) released a near-final Scoping Plan—a master list of all the policies it will implement to achieve a 30 percent cut in global warming pollution by 2020.
The plan will help California build a stronger, cleaner economy that will create jobs, insulate us from oil price spikes, and cut the pollution that causes global warming. However, there are flaws in the plan’s recommendations for establishing a viable cap-and-trade system. CARB's plan, which relies predominately on direct regulations for the electricity and transportation sectors to reach the state's 2020 emission reduction goal, sets a standard for other states and the federal government in most areas.
CARB will vote on adopting the plan before the end of the year. The plan has been two years in the making and recent changes follow three months of public hearings and meetings across the state. The plan would achieve 80 percent of its emissions reductions through policies directed at specific polluting industries and 20 percent through the Western Climate Initiative (WCI) regional cap-and-trade program, which is where the Union of Concerned Scientists has identified some problems.
OVER-RELIANCE ON OFFSETS UNDERCUTS CAP-AND-TRADE PROGRAM
CARB's plan says it seeks to participate in the WCI, a partnership among seven states and four Canadian provinces to reduce global warming pollution through an economy-wide cap that will utilize a cap-and-trade system and other policy approaches. The WCI released its minimum requirements for participants in late September.
CARB's plan appropriately recognizes that cap-and-trade is not a silver bullet. CARB is reducing pollution in the most cost-effective way. It starts with strong policies that do most of the work by targeting specific reductions in highly polluting sectors and then uses a market-based cap-and-trade system to produce additional cuts.
One area where CARB's plan falls short is its embrace of offsets, which are credits that polluters in capped sectors can buy based on estimated pollution reductions made by others in uncapped sectors. In this way, offsets substitute for cuts that could have been made directly by polluters in the electricity, industrial, and transportation sectors that cap-and-trade directly addresses. Both CARB and WCI would allow approximately half of the required pollution reductions under a cap-and-trade system to occur through offsets.
However, CARB's plan does more than the WCI's minimum offset limit requires. WCI allows states to use offsets for as much as 49 percent of reductions over the lifetime of the program without rules on when polluters can use offsets. Under that approach, polluters could rely entirely on offsets in the early years of the program, which could allow polluters in capped sectors to delay making their own emission reductions until later years, in some cases not until 2018. In contrast, California has decided it will limit the use of offsets to 49 percent during each three-year round of reductions under WCI. In that way, California will guarantee real reductions in sectors covered by a cap-and-trade system throughout the program's earlier years.
CARB should go further than the minimum standards agreed to in the WCI process. The plan should limit offsets to a small fraction of reductions instead of up to 49 percent. An economic analysis by CARB and the University of California Berkeley found that a strong set of climate policies including a cap-and-trade system without any reliance on offsets would boost the economy. We should be fully capitalizing on the innovative energy and capacity in California to create new clean technologies that can help reduce global warming pollution here and around the world instead of outsourcing the effort through offsets.
AUCTIONING
The WCI leaves states and provinces to decide how many pollution permits under a cap-and-trade system it would auction or give away to polluters for free. The WCI set a minimum of 10 percent auctioning at the start of the program, increasing to 25 percent in 2020. CARB's draft implementation plan says that achieving 100 percent auctioning is a "worthwhile goal."
Auctioning pollution allowances is the simplest, most fair and effective choice. Polluting industries should receive a clear signal that this is the direction the system is headed.
All of the Northeastern and Mid-Atlantic states involved in the Regional Greenhouse Gas Initiative (RGGI) decided to auction nearly or fully 100 percent of their allowances, even though a much lower minimum was set earlier in the RGGI process. Auctioning allowances raises money that can be used to benefit consumers and invest in clean energy and other green investments. Just two weeks ago, the RGGI states raised $38.6 million in the first U.S. auction for global warming pollution permits.
Giving away pollution permits for free would generate windfall profits for polluters and enrich out-of-state corporate shareholders at the expense of Californians.
TAILPIPE EMISSIONS FROM CARS AND TRUCKS
CARB's plan includes a commitment to strengthen California's landmark global warming standards for cars and trucks. Thirteen other states have adopted them, but they have not been able to implement the standards because of automakers lawsuits and the Environmental Protection Agency's refusal to grant California a waiver under the Clean Air Act. It is the first time that the EPA has ever denied California such a waiver.
CARB's plan recommends that the state evaluate and possibly implement a "feebates" program, a system of one-time rebates and surcharges on new passenger cars and light trucks based on the amount of global warming pollution they emit. A feebates program could complement California's tailpipe standards if both were implemented. According to a University of Michigan study, implementing a clean car discount program would deliver an additional 21 percent reduction in global warming pollution beyond the tailpipe standards.
A feebate program would make cleaner cars more affordable for everyone. Cleaner cars cost less to operate, so people would save money on gas with this program, too. This is groundbreaking policy that would give automakers an added incentive to produce cleaner vehicles.
More than 1.5 million new vehicles are sold in California each year, representing about 10 percent of the new vehicle market in the United States and more than a quarter of California's global warming pollution comes from cars, according to UCS.
In addition, the CARB plan includes policies to reduce emissions from heavy-duty trucks with hybrid engine technology and other efficiency improvements. Like many of CARB's proposals, the heavy-duty truck provisions could improve public health by reducing smog-forming pollution. CARB's first action to address global warming pollution from heavy-duty trucks is scheduled to occur at the December 11 board hearing, when it will take up a measure to reduce emissions from tractor-trailers operating in the state.
