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PRI's Environmental News Magazine

Will Jerry Brown Shift California Cap and Trade?

Air Date: Week of June 3, 2011

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The market-based centerpiece of California's climate law could change if Governor Jerry Brown wills it so or if an environmental justice lawsuit prevails. Living on Earth’s Ingrid Lobet reports on the hopes of some environmentalists to change the cap and trade climate scheme before it becomes final.

Transcript

GELLERMAN: Well, to address the threat of climate change, California has adopted the toughest laws in the nation. Most of the carbon emission reductions come from rules requiring more renewable energy, more fuel-efficient cars and cleaner gas.
But the centerpiece of California’s carbon clean up effort is supposed to come from the marketplace - a carbon cap and trade mechanism - so companies can buy and sell emission credits. But that centerpiece is under threat -- and not just from the folks you might expect. Living on Earth's Ingrid Lobet reports.

LOBET: Since California adopted the cap and trade portion of its climate law, there's a new Governor in town, Jerry Brown. Five months into his term Brown is still tied up with nightmare budget scenarios. But when he does turn his attention to climate, he'll have influence: the rule isn't final yet, and the Air Resources Board that is writing the rules serves at his will. Bill Magavern, director of Sierra Club California, hopes the Governor will use his broad discretion.

MAGAVERN: There is no reason why the past hand of Arnold Schwarzenegger needs to continue to guide California's global warming policy.


California Governor Jerry Brown could still influence the state’s cap and trade regulation. But he may wait till the state's budget woes are alleviated. (Office of the Governor)

LOBET: The Sierra Club has two main gripes with cap and trade the way it's written. In the early years of the market, supposed to begin next January, most of the allowances are to be given away to businesses – not sold. The Sierra Club says Brown could recast the model by charging for these permits.

MAGAVERN: You have a windfall for big oil companies who are already making billions and billions of dollars in profits. So at a time when the state is broke, why would be we giving money away to oil companies?

LOBET: The second issue concerns what happens when a business decides it cannot afford, in a given year, to make improvements that lower emissions. The business can, of course, purchase allowances from other companies. But they have another option Magavern considers a major loophole. They can also purchase allowances from timber firms who grow trees, sequestering carbon in forests.

MAGAVERN: Logging companies could clearcut forest in California and then replant them and say that they were offsetting carbon pollution, which would be the wrong thing for the climate and definitely the wrong thing for California’s forests and streams and habitat.


Bill Magavern directs Sierra Club California (Sierra Club)

LOBET: The group that wrote the rules sees it differently: it's maximizing carbon in the forest, not conservation, that's the goal. And the chief of the California Air Resources Board says there won't be any reward for clear-cutting.
There are other critiques that come from grassroots environmental groups. They’ve long worked to restrict cap and trade. Angela Johnson Meszaros represents several mostly small groups of residents who live close to heavy industry. At first they saw the law as a once in a lifetime opportunity to improve conditions for communities who already have high aggregate exposure to pollutants.

JOHNSON-MESZAROS: It is the place where the interests that I care about are overlapping with what the mainstream environmental community cares about. The impacts of fossil fuel from extraction, to refining, to use, to disposal, are a key part of the negative impacts in a lot of the communities I care about. And if people want to address fossil fuel usage because they are concerned about carbon, I’m all for it.

LOBET: Thirty-three million Californians live with unhealthy air. In most places the air is improving. But pollution is still severe in the Los Angeles basin and other places. Large plants, like power plants and refineries, are responsible for 40% of the pollution. Since things you do to reduce carbon dioxide emissions tend to reduce the dangerous pollutants as well, Johnson was hopeful that the climate law would mean no new plants in poor neighborhoods and maybe that existing plants would have cleaner smokestacks.

JOHNSON-MESZAROS: The way it actually rolled out was, we’re not going to actually change the way we make and use energy in dealing with the climate crisis. We're not going to deal with how do we change our energy mix; we're just going to keep siting fossil fuel energy plants.

LOBET: So the residents sued the State of California saying it hadn't followed its own environmental impact law. A Superior Court judge agreed and ordered the State to stop work on cap and trade while it shows how it arrived at its decisions. But it’s unclear what effect the court order has. The Air Board says it hasn't stopped working on anything and is appealing. Stanley Young at the Air Resources Board defends the agency and says the lawsuit leaves the wrong impression.

YOUNG: We have worked hard to clean up the major sources of pollution in those communities. Many of which are down in the ports, we have cleaned up the diesel engines, we're cleaning up diesel trucks, we're cleaning up railroads and rail yards, so we are working hard to address the concerns of low-income communities.

LOBET: Firms that represent industry are closely watching these challenges. Jon Costantino now works for Manatt, one of those firms. But four years ago, he found himself in a key place at a key moment. California had passed its climate change law. Part of his job was to staff up the new climate division at the Air Resources board.


Jon Costantino, now of Manatt, shepherded climate change planning for the Air Resources Board early in the process. (Photo: Manatt)

COSTANTINO: I was one of the first three hires and I had the title of Manager of Climate Change Planning.

LOBET: He also had to oversee the creation of the gigantic plan that spelled out how the eighth largest economy in the world would ratchet down on carbon. Costantino says capping carbon and allowing the largest emitters to trade, really is the best plan.

COSTANTINO: Without cap and trade, AB 32 is what California has been doing for 30 years: energy efficiency, cleaner cars, more efficient houses. And so the reason cap and trade is important is it was going to be the first time an economy-wide market-based program was put into place. It brings in banks; it brings in the offset providers, there’s a lot more investment and interest. It really widens the field of people who care about this program.

LOBET: If Costantino sounds like he's talking about a program that's dead, he doesn't mean to. He believes it is very much alive.

COSTANTINO: It is strictly a timing issue, and, as long as ARB can get the work done this summer to finalize the regulation by fall, then the program will start up maybe by January, maybe be slightly delayed.

LOBET: And if it's only a delay, heavy industry can continue to plan for the carbon constrained California they'd begun to expect. For Living on Earth, I’m Ingrid Lobet in Los Angeles.

 

Links

California Air Resources Board cap and trade page

2011 Calendar for climate change regulation in California

California climate law-related articles by Jon Costantino

Angela Johnson Meszaros blog

Superior Court Judge Goldsmith May 2011 order enjoining ARB

 

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