Punting the Issue

oil-refinery-300.jpgWhen California creates a cap and trade system to deal with greenhouse gas emissions, as it is planning to do, there’s going to be the question of what to do with the revenue. Actually, first there’s the question of if there will be any revenue, as Mary Nichols, Chair of the California Air Resources Board (CARB), told a roomful of Silicon Valley venture capitalists and green tech leaders this week at the offices of fuel cell innovator Bloom Energy.

California’s cap and trade planning is tied to the Western Climate Initiative, but the consortium is leaving the decisions about how to dispense credits up to each state.

Nichols said that those who would be buyers in the potential cap and trade system are “very resistant” to the idea of an auction. Not exactly surpising.

But many clean energy innovators see the revenue from a cap and trade auction as the perfect opportunity to help new green technologies survive the tenuous period between venture capital funding and commericial viability. Funds from a cap and trade auction could help mitigate the risk private companies take on to develop the innovations that will be needed for a greener future.

Nichols admitted that how much of the credits to auction and where the money should go is the most controversial issue around AB 32. She cited the “cap and dividend” option, a scenario in which all the revenue would go “right back to the public, like in Alaska,” as a politically popular option. She also mentioned using the funds to reduce corporate taxes.

Bloom Energy CEO KR Srindhar likened the “cap and dividend” option to “giving people a fish” (I can only assume as a reference to the old adage about how teaching someone how to fish is better than giving him a fish).

“In the early stages, if we [California] want to be a leader in this field, we need to be seeding it to create jobs. When we do, then, month after month, they’ll be getting that dividend,” Srindhar told Nichols, asserting that money invested in green tech would pay off in the form of job creation and a better economy.

Nichols reponded by saying that she was “thinking about punting the issue for awhile.”

As we have blogged before, CARB is tasked with implementing AB 32, which requires that the state reduce its greenhouse gas emissions to 1990 levels by 2020.

According to rumors, Nichols may be influencing more than just California’s climate policy soon. Unnamed sources in recent reports have cited her as a potential Obama pick for EPA head in the new administration.