The Low-CARB Diet

Building on Bob's report about the San Francisco Clean Energy Act, the California Air Resources Board has released its draft blueprint designed to fall in line with the mandate of AB 32, the Global Warming Solutions Act, by cutting emissions 30% by 2020.

The 75+ page plan includes a range of policy recommendations. Chief among them is increasing the state's renewable electricity standard. The plan also contains provisions for a regional cap-and-trade program that could work in harmony with other more specific policies to reduce pollution economywide. The plan also says CARB will consider a vehicle "feebate" program that would provide incentives to consumers to buy cleaner cars.

In addition, the proposal includes plans to reduce emissions from heavy-duty trucks with hybrid engine technology and better fuel economy. Like many of CARB's proposals, the heavy-duty truck provisions would improve public health by also reducing smog-forming pollution. The plan also advocates for a high-speed train system in California.

Jim Downing at the SacBee has more here.

There's no question that California needs to do what is within its control to act immediately. Climate change is already imperiling two-thirds of the state's unique plants, and Los Angeles is trying dubious ideas like seeding the clouds with silver iodide particles to force it to rain. The only sustainable solution is to demand mandatory emissions caps to fight a runaway climate.

Some of their ideas are top-notch. Robert in Monterey, as his High Speed Rail blog, notes that CARB endorsed HSR to reach their targets:

Transportation is one of the capped sectors of the economy - meaning we can no longer just fly around or drive around endlessly; there will be increasing limits and at the same time rising costs as the cost of the credit purchase is passed on to consumers. To achieve the required lower emissions, and to provide sustainable and cleaner forms of transportation CARB endorsed high speed rail as one of its recommendations.

Their explanation was not particularly detailed - basically an endorsement of the concept of HSR and a projection that it would save around 1 million metric tons of CO2 in 2020. That's around 22 billion pounds per year, close to the figure of 17.6 billion pounds that Quentin Kopp has been quoting.

I also really like the feebate idea that is part of the plan:

CARB also identified a feebate program as one avenue for reducing vehicle pollution. Such a program would establish one-time rebates and surcharges on new passenger cars and light trucks based on the amount of global warming pollution they emit. This program would deliver benefits on its own, but also would 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.

The worry, of course, is that by the time the lobbyists and special interests get through with these targets, they'll blow loopholes in them so wide that their impact will be meaningless. But since the hard target of a 30 percent reduction is state law, I think there will be more backbone to actually reach those targets. Builders and design specialists have already seen this coming and are producing innovative solutions to reduce emissions and save money. At its best, carbon reduction is both efficient and cleaner, so really nobody loses except giant polluters. They're going to use the state's budget problems to raise all kinds of fears about cost, but they're really separate issues. Plus, as the Bee article notes:

The air board's mission may already have been made easier by changes in the economy. Today's high energy prices are driving many of the sorts of emissions-cutting changes called for under the plan.

Sales of fuel-efficient cars are up, transit ridership is breaking records and businesses are investing in ways to save fuel and electricity.

Many have raised concerns about the cap and trade system, but CARB chair Mary Nichols is clearly invested in it, having presided over the most successful cap and trade system in history while in the Clinton Administration, the one that virtually eliminated acid rain. It may be insufficient to have a few states in the West implement a trading system, but some industries, like energy production, aren't likely to up and leave California - the market of 38 million people is too lucrative. Anyway this gives momentum and support for a national system.

What I would like to see is a progressive cap and trade setup, which recognizes that higher energy costs disproportionately impact the poor, and seeks to balance that. This is easier said than done:

Two things are worth noting. First, utility costs are a bigger problem than gasoline. On a percentage basis, the poor pay 7x as much for utilities as the well off, while they pay only 4x as much for gasoline. What's more, unlike gasoline, there are seldom any reasonable alternatives for utility expenditures.

Second, there are always tradeoffs. Using the money from permit auctions (or carbon taxes) to rebate other taxes is indeed progressive if the rebate is fairly flat, but only if you pay taxes in the first place — which many of the poor don't. For the very poorest, then, a tax rebate scheme would still be regressive: you'd essentially be hitting them with a big new energy tax without any offset at all. Conversely, a more targeted approach, like expanding funding for the Low Income Home Energy Assistance Program, helps the poor more directly but removes the incentive to use less energy.

The answer, then, is almost certainly a bit of this and a bit of that. No single solution targets assistance to the poor ideally, but a basket of solutions (payroll tax rebates, energy assistance, more funding for mass transit, etc.) can do a pretty good job. It won't be perfect, but a well-designed program can make a cap-and-trade program pretty progressive.

Hopefully this will guide the CARB as they seek to work through the policy grinder and implement their reductions. Right now the board is considering auctioning off few permits and giving away the rest, gradually eliminating the giveaway over time. This kind of hair-splitting is wrong, and I hope they come to understand that.