Craig Miller / KQED

Wind turbines in Solano County. 78% of Californians polled favor federal support for renewable energy.

Much has been made lately of Berkeley physicist Richard Muller’s recent “conversion” to the position that global warming is both happening and stoked by human activity.* But it turns out that the controversial scientist and author has been playing catch-up.

In a statewide survey released Wednesday by the Public Policy Institute of California (PPIC), 60% of Californians polled said that the effects of global warming have already begun. Asking the question in a slightly different way, both the Brookings Institution and the Pew Center for People & the Press found that in 2011, 60% and 63% of Americans, respectively, believed that there was solid evidence that global warming is happening.

Californians took it a step further, however, with nearly three-in-four of the 2,500 participants responding that government should take steps to “counter the effects of global warming right away.” PPIC conducted the survey in July and it includes responses in English, Spanish, Chinese, Korean and Vietnamese.

Interestingly, Californians’ acceptance of mainstream climate science has flagged slightly from its peak from 2006-2008 — about 65%. LIkewise for opinions about the need for immediate climate action, with 80% of people responding, “yes, right away” in 2008. That enthusiasm waned some over the next several years, as Al Gore’s groundbreaking warming documentary faded in memory and critics launched high-profile attacks on the science. The Brookings study indicates that people often connect global warming to the experience of warmer weather, so it may have helped that a severe heat wave has made national headlines this summer.

Californians for the most part favor policies that will help reduce greenhouse gas emissions. Seven -out-of-ten respondents say they support AB 32, California’s law requiring the state to reduce its warming emissions to 1990 levels by 2020. And they support California’s tendency to go it alone, passing stricter regulations and laws than the national standards.

But don’t ask for too many details as a whopping 57% had never heard of cap-and-trade, the system of emission permits that can be bought and sold between companies. It’s the centerpiece of California’s strategy to comply with AB 32 and companies will begin trading permits in November. To be fair to the survey participants, once the policy was spelled out in the question, more than half the respondents said they favored cap-and-trade.

Let’s recap: for the most part Californians believe global warming is happening now, and something should be done about it now, including policies that would force emissions down. Some of the things favored include requiring greater energy efficiency in buildings, higher fuel economy standards in cars and trucks, and encouraging city planners to change land use and transportation strategies in order to reduce the number of cars on the road. The responses to questions about energy production, however, are a bit more mixed.

Nuclear power plants like this one at Diablo Canyon have fallen out of favor with Californians since the nuclear disaster in Japan. (Craig Miller/KQED)

Respondents were exactly split 48%-48% on whether to allow more oil drilling off the coast of California, and 63% oppose building more nuclear power plants. That number has gone up since the disastrous tsunami and nuclear meltdown at Japan’s Fukushima-Daiichi nuclear plant in March of 2011. Californians are also divided on “fracking,” the controversial process used to extract oil and natural gas from rock formations. Of those familiar with the term, slightly more oppose using the method in California (46-42%). Variations on the technique have been used for years in California’s oil patch. The current debate centers on using the method to wring natural gas out of shale formations.

On the question of renewable energy, Californians overwhelmingly favor of more federal funding to develop wind, solar and hydrogen technology, despite varying reports on the nation’s commitment to renewable energy.

*Hear an hour-long discussion with Muller, host Scott Shafer and Climate Watch Senior Editor Craig Miller, on KQED’s Forum program.

Proponents of California’s low-carbon fuel standard (LCFS) hope problems with the federal Renewable Fuel Standard (RFS) could spell an opportunity to promote the state’s groundbreaking alternative approach at the national level.

UC Davis

Dan Sperling is leading California's LCFS research group.

Scientists from six research institutions—including UC Davis—are attending a bipartisan briefing on Capitol Hill this week to present the results of a new study touting the potential benefits of a national low-carbon standard.

LCFS — part of California’s AB 32 climate change legislation — calls for a 10% reduction in the “carbon intensity” (CI) of transportation fuels in California by 2020. The federal Renewable Fuels Standard (RFS), by contrast, calls for a gradual increase of 35 billion gallons of biofuel by 2022. It also establishes threshold production levels for various biofuel feedstocks, which is where it has run into trouble.

Corn-based ethanol, conceived as a temporary solution, continues to exceed the maximum production level set by the mandate. Meanwhile, production of cellulosic biofuels, derived from non-food and potentially more environmentally sustainable feedstocks such as grasses and wood chips, has fallen short each of the last five years. The EPA reduced the 2011 cellulosic biofuels mandate by a staggering 97%, from 250 million gallons to just 6.6 million.

Daniel Sperling, director of the Institute for Transportation Studies at UC Davis and lead author of the study, sees an opportunity here. In the last six months, “the circumstances have changed a lot,” says Sperling. “People are curious whether [the California low-carbon fuel standard] could solve the RFS problem,” he says.

California’s LCFS includes all transportation fuels — electricity, natural gas, and hydrogen — as well as biofuels. It also gives fuel providers many more options to reduce carbon intensity, including:

• Reducing the CI of fuels they provide by selling more low-carbon fuels;
• Improving refinery and oil-field efficiencies;
• Capturing and sequestering carbon;
• Purchasing credits from other producers and fuel suppliers who are able to supply low-carbon fuels at lower prices.

Sperling says that the LCFS is intentionally designed to spur innovation by establishing regulatory targets that companies can bank on. But taking it national would require buy-in from corn farmers, advanced biofuels producers, electric utilities plus the automobile and oil industries, he adds. No easy task.

Craig Miller

AB 32 requires California's largest emitters to meet carbon reduction targets. If a firm's emissions are below state-mandated targets, it may auction off its remaining "allowances" to firms that exceeded their emissions targets.

Since the enactment of AB 32 in 2006, California’s greenhouse gas emissions reduction law, analysts have speculated about how to spend the money generated from the law’s cap-and-trade carbon allowance auctions, the first of which is set for this November.

On Tuesday, the State Assembly passed new legislation, AB 1532, that narrowed the options. The bill, which the California Chamber of Commerce has described as a “job killer” and an “illegal tax,” passed 47-26 and awaits action in the Senate. If ratified, it would establish a “Greenhouse Gas Reduction Account” within the state Air Pollution Control Fund and authorize spending auction proceeds on clean energy technology, low-carbon transportation, conservation and green energy research and development.

On Friday, the California Air Resources Board held a public hearing to discuss where auction funds might be spent, as a panel of speakers from across the state and country — representing a broad array of industries and interests — sounded off on where this sizable stream of new funding might be best directed.

Jim Earp, executive director of the California Alliance for Jobs, said that the funds should be spent on improvement of transit networks and infrastructure. Ellen Hanak, a fellow at the Public Policy Institute of California, suggested that a best fit is renewable energy and efficiency projects. Lester Snow, director of the California Water Foundation (and former head of Water Resources for the state), pointed to habitat restoration on the Delta and making California’s vast, energy-intensive water delivery systems more efficient.

The governor’s 2012-13 budget [PDF] also lays out a general framework for where cap-and-trade auction funds might be allocated.

• Clean and efficient energy
• Low carbon transportation
• Natural resources protection
• Sustainable infrastructure development

“These are obviously broad categories,” said air board chair Mary Nichols of the governor’s proposals in her remarks. “No one has yet suggested any precise breakdown or amounts of money to go to specific programs.”

Decisions are being made piecemeal. For instance, revenues from utilities will be returned to electricity customers, though exactly how is still being worked out.

Perhaps it’s no surprise that no one yet knows how California’s auction funds will be spent. There is still debate over whether the funds should be considered a fee or a tax — a legal determination that, under Proposition 26, could potentially limit where money is directed.

And as Climate Watch senior editor Craig Miller reported earlier this month, no one can predict with any certainty at what price carbon will trade in the California market. Most estimates put the figure at between $15 and $30 per metric ton, which means that when the market is fully up to speed in 2015 it could pull in as much as $6 billion a year. (The governor’s budget stated the program could generate as much as $1 billion in its first year.)

As for how cap-and-trade might state boost the state’s economy, Nichols pointed to a recent analysis of the Regional Greenhouse Gas Initiative cap-and-trade system, which includes ten  states in the Northeast. That program has reportedly injected $1.6 billion into the regional economy through such measures as consumer bill reductions and sales of energy efficient equipment.

The period for public comment on carbon auction funds spending (click for online comment form) is open until June 22.

Forcing utilities to pay for their carbon emissions, as California plans to do, will mean more costly megawatts. Six months before formal compliance with the state’s new cap & trade system begins, regulators are still sorting out what to do about that.

One of them is to provide rebates to offset hikes in electric bills. A new report from the clean-economy advocates, Next 10 attempts to sort out the options and put some concrete numbers on them. For example, the authors estimate that for PG&E customers, pricing carbon will add somewhere from two-to-seven dollars a month to summer electric bills, and anywhere from $2.50-to-more than $10 for customers served by Southern California Edison. Where you fall in that range depends in part on which of California’s many climate zones you live in. Places like the Inland Empire, which rely more on air conditioning, would fall in the upper end of the range.

Next 10

Chart shows the potential impact of cap & trade on electric rates for customers of various California utilities.

Authors Dallas Burtraw and Sarah Jo Szambelan figure that there should be enough cash from cap & trade to completely offset increases to electric consumers from cap & trade, but not to offset increases from the state’s transition to renewable sources of energy.

We’re not talking about chump change here. Estimates of the state’s annual take from cap & trade range from somewhere between a half-billion and $1.6 billion in the early going, to nearly $6 billion once the program expands in 2015. It’s hard to pin down because no one really knows what the price of a metric ton of carbon will be. Around $30 is a number that keeps coming up in projections but no one will truly know until the market is up and running, late this year.

“Electricity costs are going to go up,” Burtraw says bluntly. The questions are: who bears the brunt of those increase? Exactly how to protect retail customers from electrical sticker shock is a topic of intense debate. So far, three main approaches have emerged in discussions:

• Use all the proceeds from utilities’ permit fees to offset electric bills
• Use 90% for rebates and invest the remainder in energy efficiency
• Split the money roughly 50/50 between investments in clean energy and efficiency

Presumably those “investments” would include offering homeowners deals on upgraded appliances, insulation, and so forth. Even the cash rebates themselves present a puzzle. Should your utility simply knock something off your bill, or send you a separate rebate check? It matters, says Burtraw, who argues that consumers should at least see the impact, if not feel it. Otherwise they might not be motivated to save energy. “If that cost increase is not passed along to ratepayers,” Burtraw told me by phone from New York, “then ratepayers, at their end, will not be making adjustments that reflect the real cost of electricity.”

Regulators are expected to decide on a plan in June.

Asif A. Ali / flickr

Montreal at sunset: Quebec's economy is about one-sixth that of California.

Quebec has emerged as California’s first full-blown partner in the carbon trading program that ramps up later this year. That means that, pending final approval next month, when the two governments issue their first round of greenhouse gas pollution permits in November, industrial buyers will be able to use them both interchangeably.

Mary Nichols, who chairs the California Air Resources Board and heads implementation of the program, says the move, “provides more options to California businesses and lays the groundwork for other partners to join with us.”

Most other potential partners maintain only a paper presence in the so-called Western Climate Initiative, a regional carbon trading pact that was designed to create a regional carbon market. Nichols, who’s on record saying that California would not “go it alone” in cap-and-trade, can breathe a small sigh of relief today. But Quebec is a relatively tiny partner, with economy one-sixth the size of California’s.

“It’s a demonstration that you can work out all the technical details and difficulties of linking two very different economies with each other, and create a tradeable instrument,” Nichols told me by phone today,  “It’s an ambitious attempt,” she conceded, but “an important step toward a global solution.”

Nichols declined to predict what U.S. state might be the first to join hers aboard the carbon-trading bandwagon–or when, but she predicted there might be some movement after November’s presidential election, and pointed to progress in three other Canadian provinces and recent legislation in Mexico, which she thinks sets the stage for a “vibrant potential North American market.” She says she’s optimistic that Ontario and British Columbia might join within a year or so.

Cap & trade remains a controversial policy, under which businesses pay fees to exceed their allotted carbon emissions, and can buy and sell credits among themselves, so long as total emissions don’t exceed a state-imposed “cap.” The concept has been opposed by both heavy industry and some environmentalists.

Québec’s minister for Sustainable Development, Environment and Parks, Pierre Arcand, said in a prepared statement that, “Climate change is a global issue that must be addressed by all levels of government.” Arcand added that he’s, “optimistic” that his province’s link with California “will be followed by many other partners.”

Today’s announcement triggers a 45-day public comment period in California, after which the Air Board is expected to formally adopt the linkage in June.The first linked auction between California and Quebec is scheduled for November, with a dry run in August.

See also Felicity Barringer’s analysis for The New York Times.

By Thibault Worth

Craig Miller

California aims to cut the carbon content of fuels by 10%.

First it was go. Then it was stop. Now, it’s go again.

As of Monday, California’s groundbreaking Low Carbon Fuel Standard (LCFS) was back on track for implementation after the Ninth Circuit Court of Appeals issued a stay of an injunction against an earlier lower court ruling.

In a statement, the state’s Air Resources Board, which is responsible for the regulation, said the court’s decision would allow California to “continue implementation and resume enforcement of this important program to reduce greenhouse gas emissions.” [full statement PDF]

LCFS aims for a ten-percent reduction in the “carbon intensity” of gasoline and diesel fuels by 2020, by using a “life-cycle” approach. That means the standard looks beyond the carbon released during combustion, tallying up emissions from drilling (or harvesting in the case of biofuels), refining, and transporting of fuels.

The standard has fueled plenty of opposition from the oil industry, which argues that the Air Board has grossly overestimated how much biofuel can be brought to market to offset higher-carbon fossil fuels. The Western States Petroleum Association calls the LCFS a “disaster-in-the-making” that will raise the price of fuel for consumers.

Last December, Judge Lawrence D. O’Neill of the U.S. District Court for the Eastern District of California sided with Midwestern ethanol producers who argued that the standard would penalize their use of coal-fired electricity for refining activities, as well as their transport of fuels to California. O’Neill ruled that the LCFS violated the Commerce Clause of the United States and issued a preliminary injunction blocking the ARB from further action. The Air Board appealed the lower court’s decision in January.

Stanley Young, a spokesman for ARB, says that California isn’t telling out-of-state fuel producers how to run their businesses, only that they need to find a way to reduce the carbon intensity of their fuels if they want to do business here. He also argues that the standard will drive innovation and investment in California fuel industry.

The Ninth Circuit’s will continue to review ARB’s appeal of the lower courts decision while the stay is in effect.

California Air Resources Board

As chair of the California Air Resources Board, Mary Nichols is presiding over the nation's first comprehensive cap-and-trade program.

When its nascent cap-and-trade program ramps up later this year, California will be the first state in the nation to reduce greenhouse gases by making a broad spectrum of big polluters buy permits to exceed their allotted emissions.

Other governments, industry and scientists will be watching, but there’s still a lot to sort out. That much has been evident at this week’s carbon market and policy conference in San Francisco, “Navigating the American Carbon World.”

The long and winding road to carbon trading was highlighted by Mary Nichols, chair of the California Air Resources Board, in a little prank she played on the gathering. Obviously reading from a script, she stumbled over words, looked up at the audience, then back down at the page, plodding through her replies to moderator Diane Wittenberg.

“I see the clean air debate and the global warming debate as a great opportunity to deepen our commitment as a people to values that benefit us all and that benefits generations that follow,” Nichols said. Then she quoted Gregory Bateson, a British anthropologist who was married to Margaret Mead. Then she went on reading.

Eventually, Wittenberg interrupted, Nichols giggled, and they explained themselves: Nichols had gotten her hands on a speech Governor Jerry Brown had delivered in 1981. She said she was there at that speech, when Brown was supposed to talk specifically about the Clean Air Act, but went off on a tangent, speaking about global leadership instead.

“I wanted to take advantage of this opportunity which you have given me to insert some of these words here,” Nichols said, returning to her own persona. “Because I know that many people are always asking the question, and some of them ask me. Is the Governor really committed?”

Nichols says he is. But Brown has not been as proactive as his predecessor. Meanwhile, California’s emerging cap-and-trade program plan is still fraught with questions, not least of which is how to spend the revenue that the state expects to raise from the sales of pollution permits. At a hearing last month that was intended to hash out some of those details, the biggest news was that the first carbon permit auction would be delayed, pushed from August back to November.

The conference is meant to help the academics, policy-makers and business people in attendance navigate the changing landscape of carbon markets. As California’s top air regulator, the job has fallen to Nichols to make carbon trading a reality. In her remarks to the carbon conference, she gave a nod to the complexities ahead.

“There’s a lot of uncertainties out there,” she told the audience of several hundred. “I don’t want to say I feel sorry for the oil companies, because they’re doing pretty well, thank you,” she said. “But I would say that, you know, if I were in the utility business, I would be giving a lot of thought to what my business was going to look like.”

Nichols also acknowledged that while there are real economic benefits to California being a leader, there’s no guarantee that other governments will follow its example. Currently no other state (in the U.S.) is. And on Capitol Hill, cap-and-trade is a non-starter.

“If by 2020 we don’t have a government in the United States — and I would say a government in Canada as well — that have stepped up to the plate and adopted some form of national commitment to reduction of greenhouse gases, and joined in some sort of an international program to accomplish this goal, then I would say our claims of leadership are not all that they were cracked up to be,” Nichols said.

California’s first carbon permit auction is scheduled for November, with a practice run in August.

Shell, US

Shell has partnered with MIT to explore carbon sequestration.

Royal Dutch Shell CEO, Peter Voser affirmed his company’s commitment to AB 32, California’s climate change legislation, and also explained why a carbon trading system is crucial to the development of alternative energy sources.

“We are clearly in favor of cap and trade systems,” he said to an audience of Silicon Valley business people and climate experts Wednesday in Burlingame. “We’d like to have it globally, to level the playing field.”

This statement from Shell, the global oil and gas company headquartered in the Netherlands and one of the world’s largest companies, is notable when you consider the strong opposition to AB 32 from the oil industry at large. In 2010, Proposition 23 attempted to derail the imposition of AB 32 provisions and was largely bankrolled by Tesoro and Valero, two Texas oil companies.

High producers of carbon dioxide, especially oil refineries, will be hard hit when AB 32 goes into force. So what’s the rationale of Shell’s apparent “green” attitude?

Voser explained that the company is not waiting for cap and trade to be commonplace. Several years ago, he said Shell started taking into account a charge for CO2 of $40 per ton to reflect the future price of CO2 in its internal accounting. What he didn’t say is that in Europe, where Shell is headquartered, an emissions trading scheme is already in existence and the implementation of AB 32 would arguably make Shell more globally competitive.

“We are emitting quite a bit of CO2,” Voser acknowledged in his clipped Swiss accent. And he highlighted the company’s investment in carbon sequestration projects, one of which begins construction in Canada shortly.

Shell, US

The Gulf of Mexico accounts for approximately 55% of Shell’s oil and gas production in the USA.

He also drew attention to the GameChanger program at Shell, which invites people to pitch innovative ideas for potential sponsorship from the company. But almost in the same breath, he accepted that the energy industry is resistant to change, citing the innovator’s dilemma.

According to Voser, global energy demand will double between now and 2050, half of which will come from growth in China.  So how can we grow without burning up the planet?

The Shell chief executive says alternative energy, energy efficiency and demand management are all parts of the solution, and he anticipates that Silicon Valley’s greatest contribution will be on the demand side.

He pointed out that shortening the delivery time for innovative technologies is key. Historically, it takes 15- 30 years for new energy technologies to be scaled and delivered. This needs to be cut in half, according to Voser, and he says he views energy policy as an important component to spur innovation and adoption.

“If we really want to have the right technologies developed, not having a CO2 price will mean there is uncertainty and therefore you will not get certain energy efficiency or innovation projects that you need implemented,” he added.

This green talk by Voser is all very well, but Shell’s environmental record, particularly in Africa, is hardly emerald green. One example that’s drawn recent criticism is the company’s legal action against environmental groups that are seeking to block drilling in the Arctic Ocean off Alaska’s North Slope.

Voser’s explanation of the legal action on Wednesday was not convincing. He described the company’s move as “a tactic to bring all parties to the table early,” and begin an open dialogue. The environmental groups argue that the drilling project will adversely affect native communities and that the company’s oil spill contingency plans are grossly inadequate. But Shell has spent over $4 billion on the project to date, and has vowed to spend even more, setting up a David and Goliath battle: deep-pocketed oil company versus feisty but meagerly funded nonprofits.

Note: Voser spoke at a Churchill Club event at the Hyatt Regency Hotel in Burlingame on Wednesday March 21^st. The audience included a who’s who of the Bay Area’s climate and clean tech experts, including Facebook’s new green czar Bill Weihl; venture capitalist Ira Ehrenpreis and Dan Geiger of the US Green Building Council.

Bloom Energy

Caltech needed more generation capacity to meet the demands of its energy-intensive research.

Sunnyvale-based Bloom Energy made a big splash in 2010 when it came out of stealth mode – on the CBS program 60 Minutes no less – and announced its high-efficiency fuel cell, spawned by a NASA project for Mars. It has earned an impressive roster of clients including Google, eBay and Walmart.

But beyond the inevitable skeptics, the really big catch? “Bloom Boxes,” as the fuel cells have been dubbed, have a price tag of around $700,000. Hardly affordable for all but the largest companies with plenty of cash.

Yet California Institute of Technology, the private research university generally known as Caltech, had twenty Bloom Boxes installed on its Pasadena campus in 2010. Each box now produces 100 kilowatts of electricity for a total of two megawatts capacity; or 17% of the university’s electricity demand.

Here’s where the affordability play comes in. Instead of buying the boxes outright and incurring a hefty up-front cost, Caltech signed up for the Bloom Electrons Service, a power purchase agreement to buy power at a predictable price for the term of the contract (usually ten years). John Onderdonk, Director of Sustainability Programs at Caltech wouldn’t divulge its pricing or term details but said, “It is more cost-effective than the power we would otherwise purchase from the grid.”

And cleaner, too. The fuel cells are fed with directed biogas – methane captured from landfills, a low-carbon renewable energy source and, as Onderdonk explains, this source is preferable to energy from the local utility which gets about 60% of its power from a coal power plant in Utah.

State and Federal incentives accruing to Bloom Energy smoothed the way for the agreement, and these incentives allowed Bloom to provide the university with a lower rate than its local utility charges, Onderdonk confirmed.

So, why did Caltech feel compelled to pursue a clean energy solution to its increasing energy needs? Part of the answer lies in California’s existing climate legislation. Onderdonk explained that Caltech is committed to reducing its greenhouse gas emissions in accordance with AB 32, the landmark climate change legislation which puts in place a series of caps and market mechanisms to reduce total greenhouse gas emissions to 1990 levels by 2020. But the impetus goes beyond the State of California.

“It is important for us that our administration and operation of campus reflect the world-class research into climate change and sustainable energy technology that is occurring on the academic side of the organization,” the Sustainability Director added.

Onderdonk also says the Bloom solution resonates with Caltech’s NASA connection.

“The fundamental technology in the Bloom fuel cells was originally conceived as part of NASA’s mission to Mars,” explains Onderdonk. “So we felt a connection to the technology given our involvement with operating the Jet Propulsion Laboratory for NASA.”

In addition, like any climate-minded organization, Caltech is also pursuing the low-hanging fruit of the energy equation: energy conservation.  Beyond its Bloom Boxes and 1.3 megawatts of photovoltaic solar, the university pursues an aggressive program to implement energy conservation in its existing buildings and construct new buildings that maximize energy efficiency. “All energy conservation projects are funded through a revolving loan fund, whereby capital is borrowed from our ($1.77B) endowment and utility savings are reinvested back into the endowment,” Onderdonk explained. “This model is unique in the nation and we are currently getting about 30% [return] on those projects.”

A 30% return? That’s the kind of yield that would make any fund manager swoon, especially in this challenging economy.

As for Bloom Energy, it’s staying tight-lipped about its returns and still has some challenges to overcome before its Bloom Boxes start blossoming in the backyards of homes and commercial buildings all over the world – the bold vision of cofounder and CEO of Bloom Energy, KR Sridhar, the former NASA scientist.

The key to mass market adoption remains affordability. As Sridhar told me in a 2010 interview. “If it’s not affordable, it’ll be the niche market — it’ll be a Tesla.  We need it to be a Honda Civic.”

It’s official (no, really, this time). California has cap & trade — or will once the program starts ramping up next year. Today’s approval by the state’s Air Resources Board was described by chair Mary Nichols as like “moving a large army a few feet in one direction.”

John Myers

Ready to roll: A license plate in Sacramento bears the legislative shorthand for California's landmark climate policy.

The objective that “army” is marching — or shuffling — toward is, of course, the fulfillment of California’s goal to roll back greenhouse gas emissions to 1990 levels by the end of this decade. With at least a semi-intentional pun, Nichols calls cap & trade the “capstone” of that effort, although the program is expected to produce at most, 20% of the hoped-for reductions in carbon emissions. The rest will come from other measures either lumped under or related to the state’s Global Warming Solutions Act, more widely known as AB 32.

Those other measures include stricter standards for tailpipe emissions, a “low-carbon fuels standard” (still being worked on), and the ambitious-but-attainable goal to get a third of the state’s electricity from renewable energy sources, also by 2020.

The next major milestone will come late next year, when the state begins meting out permits or “allowances” to release carbon dioxide into the air. At first, 90% of those permits will be given away but analysts have estimated that within a few years, at least half will be auctioned off at a price estimated by Thomson Reuters Point Carbon analytical service to be about $36 a ton.

To most of us, that doesn’t mean much by itself, but for a refinery pumping out a few million tons a year (link to map), that adds up to some serious revenue for the state. How those “carbon dollars” will be spent is one aspect of the program that has yet to be worked out.

Speakers representing business and other interests, including a large contingent from ConocoPhillips, which has four refineries in California, mounted an eleventh-hour appeal to the Board, to stretch out the compliance schedule. Lisa Bowman, who works in safety compliance at the company’s Carson and Wilmington refineries, told me she regards the state emissions fees that will be required as the biggest threat to her job in 22 years.

“We want clean air, there’s no doubt,” Bowman told me after her testimony. “But at the same time the restrictions that this bill is putting on us could run our employer out of business, which puts thousands of people out of work.”

After a lawsuit by environmental justice groups delayed implementation of the cap & trade plan, the Air Board pushed back actual compliance with the regulation to 2013.

Here are some program highlights, taken from a breakdown provided by the Air Board:

Scope
·         Program covers about 350 businesses, representing 600 facilities
·         Starts in 2013 for electric utilities and large industrial facilities
·         Starts in 2015 for distributors of transportation, natural gas and other fuels
·         Designed to link with similar trading programs in other states and regions

The Cap

·         Set in 2013 at about 2% below the missions level forecast for 2012
·         Declines about 2% in 2014
·         Declines about 3% annually from 2015 to 2020

Allowances (Permits to Emit CO2)

·         Large industrial facilities
- Start with free allocation but must buy auctioned allowances later
·         Electric utilities
- Free distribution, with value of allowances to benefit ratepayers
- Allowances to be set at about 90% of average recent emissions

Next Steps:

·         January 1, 2012: Cap-and-trade regulation becomes effective
·         August and November, 2012: first auctions planned
·         January 1, 2013: Compliance obligation for emissions begins