AB 32: It’s All About the Numbers…or Not

3239422267_691b4f3488_m.jpgWith its legal mandate to reduce greenhouse gas emissions approximately 30% by 2020, California leads the nation in plans to combat climate change. But unlike Gov. Schwarzenegger and Al Gore, not everyone thinks reaching 80% of current emissions levels in 11 years is a plausible target.

At a U.S. Fish and Wildlife Service conference this week in San Francisco, Stanford professor Stephen Schneider called the 2020 target “an impossible dream” and argued that setting unrealistic targets such as this one could ultimately hurt the emissions reduction process by reducing credibility, and perhaps, momentum.

Schneider, a member of the U.N.’s Intergovernmental Panel on Climate Change (IPCC) and a senior fellow at Stanford’s Woods Institute for the Environment, said that instead of focusing on specific percentages, policymakers should be focused on investing in the right technologies so that by 2020, our economy will be ready and able to handle a sustainable, long-term reduction in emissions.

“We need to get off the numbers and get on (the) investments,” said Schneider. “We’re not going to be credible if we get focused on something that can’t happen.”

Proponents of AB 32, like Google CEO Eric Schmidt, argue that the goals set by California’s 2006 Global Warming Solutions Act (AB 32) will foster clean energy technology–the type of investment that Schneider advocates. No one denies that reaching the 2020 target will be a challenge. And earlier this month California Air Resources Board Chair Mary Nichols seemed to echo Schneider’s sentiments when she told VerdeXchange News that rather than using the AB 32 as a “counting game,” the the goal “is to achieve real transformation in our energy economy.” She cited the requirement that the law be updated every five years, thus leaving room for a mid-course correction down the road.

Read the full Nichols interview here.

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.

Proposed Plan for Reducing Emissions in CA

California is one step closer to implementing the Global Warming Solutions Act of 2006, or AB 32, the law that requires the state to reduce greenhouse gas emissions to 1990 levels by 2020. Today, the California Air Resources Board (CARB) released its proposed scoping plan for how to achieve this goal.  CARB president Mary Nichols said more than 40,000 comments were submitted in response to the draft plan released in June, which we wrote about last month.  Today’s plan will go before the Board for approval in December.

One of the biggest changes to the scoping plan is that the target for reducing Regional Transportation-Related Greenhouse Gas emissions by 2020 was more than doubled from two to five million metric tons. CARB anticipates meeting this goal with a combination of improvements to alternative transportation infrastructure (such as public transit and biking lanes), building sustainable developments, and reducing vehicle trips through incentives and education strategies.

Another change is the addition of a goal for local governments, which was not articulated in the previous version of the plan.  CARB is recommending local governments reduce greenhouse gas emissions by 15 percent below today’s levels by 2020.

A big component of the scoping plan is a cap and trade program that covers 85 percent of the state’s emissions.  The plan is being developed in conjuction with the Western Climate Initiative, which includes seven states and four Canadians provinces that have agreed to work together to cap emissions and create a regional carbon market.  In September, we wrote about the carbon trading market set up by ten eastern states, the Regional Greenhouse Gas Initiative (RGGI). 

Questions still remain about how California’s carbon credits will be divided up and whether they will be handed out, auctioned off, or, more likely, a combination of the two.  WCI has left this decision up the individual states with a recommendation of a minimum auction for 10 percent at the outset of the program increasing to at least 25 percent by 2020, and perhaps higher in the future. Nichols said today that California is considering auctioning 20 percent.  Of course, for many environmentalists, the closer to a 100 percent auction, the better. 

For more information and analysis on the plan, listen to our own Craig Miller, Senior Editor of Climate Watch, on KQED Radio talking with host Sarah Varney. Listen to Miller’s report on AB 32 that aired on the October 16 edition of the The California Report.