Cap And Trade: California’s Best Secret

by Kate Gordon, via Huffington Post

A new statewide poll in California has mixed results for those of us dedicated to fighting climate change. While the good news is actually great news, the bad news is a call to action.

Let me start on the upbeat side, which recognizes the magnitude of the issue.

The Public Policy Institute of California’s 12th annual poll on “Californians and the Environment” found that a strong majority of Californians, 78 percent, thinks that the world’s temperature has probably increased over the last 100 years, versus 17 percent who said it probably hasn’t. Most respondents, 60 percent, said the effects of global warming have already begun, and even more, 71 percent, support the state law requiring emissions reductions. Their feelings are borne out by hard science, as we know from NASA scientist James Hansen’s recent op-ed, in which he definitively links the extreme weather of the past few years with climate change.

More of the encouraging results:
• Majorities favor policies requiring increased energy efficiency for residential buildings, commercial buildings and appliances (77 percent);
• requiring industrial plants, oil refineries, and commercial facilities to reduce emissions (82);
• encouraging local governments to change land use and transportation planning so people could drive less (77);
• requiring all automakers to reduce emissions of greenhouse gases even further in new cars (78);
• and requiring fuel providers to reduce the carbon intensity of transportation fuels at least 10 percent by the end of the decade (79).

But now for the head-scratcher.

California actually already has a law in place to lower emissions: AB32, which aims to reduce carbon levels to their 1990 levels by 2020. But a major mechanism to achieve those goals, a cap and trade program, remains somewhat of a mystery to a majority of state residents. The poll found that 57 percent had never heard of it — despite the hundreds of news stories on the topic in 2012 alone.

As Californians learn more about AB32, it’s critically important that they get the right information.

Well-financed opposition groups are revving up a noisy campaign to block cap and trade from taking effect. Using untruths, half-truths and scare tactics, they’re charging that it amounts to a tax, that it would drive businesses out of California, that it would drive up energy costs for consumers.

Let me be clear: Not true. Not true. Not true.

A tax? No. Current state law allows the state to raise revenues from companies engaged in harmful activities. Polluting the air is harmful to public health, causing illness, deaths and higher health-care costs, a huge drain on the family budget and peace of mind. Putting a price on this harmful activity — much as we put a price on, say, tobacco — will more accurately account for the true costs of pollution on the state’s budget, and will raise an estimated $1 billion in new revenue for California.

Drive businesses away? No. In California’s program, a significant portion of the allowances — 90 percent in the first year — will be distributed free to utilities and the biggest carbon producers. This will ease the transition toward cleaner operations and give these industries plenty of incentive to remain in the state. If anything, the cap and trade program will bring more business and jobs to California. Look at the success of cap and trade in the northeast states under the Regional Greenhouse Gas Initiative (RGGI): through that program, they’ve added about 16,000 new jobs in energy efficiency and renewable energy and seen billions of dollars in net economic benefits for the region overall.

Other revenues from carbon allowance auctions will be re-invested in California in the form of support for research and development, commercialization, manufacture and installation of renewable and efficient energy technologies.

Raise energy costs? No. Giving free allowances to utilities in the early years of the program means they won’t have to increase electricity rates. If we spend the revenue from the cap and trade program wisely, we might actually see a drop in energy costs.

The RGGI states are saving consumers $1.1 billion on electric bills and $174 million on natural gas and heating bills over the next decade because they invested cap and trade revenue in energy efficiency retrofits. Since the inception of RGGI, Massachusetts has generated $3 to $4 of savings for each $1 invested in energy efficiency.

Those dollars translate into more money in household budgets, which in turn allows those consumers to spend more on other goods and services, helping the overall economy of the region. And energy savings for industrial consumers leads to more efficient and competitive manufacturing and commercial operations — also a boon for the region.

Despite the clear benefits of policies to address climate change, the federal government and most states have continued to ignore the issue. Not California. AB 32 is the most ambitious program in the United States to combat the pernicious effects of global warming. But the program will only be successful if it is embraced by the California citizens who say they want action on climate change.

I see the PPIC poll as a call to action — especially for those of us with the luxury of working every day on policy issues we care about. We need to do a better job communicating with our allies communicate about those issues to our allies, policymakers, and the public, to change California’s perception of AB32.

California has always been an innovator when it comes to national problem solving, and the poll results suggest it’s time to take an aggressive stand against further damage to the atmosphere. The state’s approach to the solution, through AB 32, is based on science and economic realities that hold benefits for the environment and for the state economy.

The more that people understand that, and the more we can spread the word, the less anyone will be scared off by half-truths and fear.

Kate Gordon is Director of Advanced Energy and Sustainability at the Center for the Next Generation. She is also a Senior Fellow at the Center for American Progress. This piece was originally published at the Huffington Post and was reprinted with permission from the author.

8 Responses to Cap And Trade: California’s Best Secret

  1. Leif says:

    I pay $150/ton of garbage I haul to the dump. $50/ton for yard clippings. I have waste water fees and even a $5/month “rain run off” fee. Mean while the GOP and Ecocide Fossil Barons pis* all over themselves if humanity even suggests a $25/ton fee to dump TOXINS into the air, water and dirt of the world! Can’t hurt (pollution) profits you know… Go figure.

  2. Jan says:

    What I would like to know is how effective has Cap and Trade been in lowering emissions. Any data?

  3. Bill says:

    I am a Californian and a proud supporter of AB32. But I cringe when I read that “Giving free allowances to utilities in the early years of the program means they won’t have to increase electricity rates…. we might actually see a drop in energy costs.” This represents a real misunderstanding of how cap-and-trade works. The WHOLE POINT is to make fossil fuels more expensive, and therefore promote conservation and development of greener energy alternatives. In this regard it works exactly like a carbon tax. Handing out free permits to big polluters eases their pain and enhances political feasibility, but it does not alter their opportunity costs and therefore does not necessarily lower retail prices. Yes, in the longer run alternative energy may pay off in actually lower costs… but to claim that an effective cap-and-trade program will be completely painless is to set it up for political failure in the future when voters find out it’s not true. As the post suggests, “Putting a price on this harmful activity” is exactly what we should be doing, but remember that we are ALL engaged in the harmful activity when we turn on a light or drive our car. AB32 means we will ALL have to pay the price.

  4. Linked above, Footnote 1: “RGGI, Inc. has reported that between 2008 and 2009, electric generation from RGGI-affected electric generation sources decreased by 17.9 million MWh, or 9.1 percent. During that same time period CO2 emissions from RGGI electric generation sources decreased by 27.6 million short tons, or 18.4 percent. “CO2 Emissions from Electricity Generation and Imports in the 10-State Regional Greenhouse Gas Initiative: 2009 Monitoring Report,” RGGI, Inc., September 14, 2011.”

  5. Mark Shapiro says:

    ” . . . remember that we are ALL engaged in the harmful activity when we turn on a light or drive our car.”

    It’s good for us climatehawks to be reminded once in a while.
    Simple conservation and efficiency are the foundation for clean energy and we should promote them at every turn.

  6. Lewis Cleverdon says:

    Just how myopic can US environmentalists be ?

    According to this article’s self-congratulatory puffery, the answer is – about as far-sighted as a mole.

    Getting back to 1990 emissions by 2020 sounds so great – so long as you overlook the facts that:
    – more than a decade ago America gave its solemn word that it would cut 7% off 1990 by 2008 – 2012;
    – this present target is even less than Obama’s “pledge” at Cancun of 3.67% off 1990 (aka 17% off Bush’s unilateral 2005 baseline) for the whole country’s target;
    – spending the next 8 years getting back to 1990 output then leaves only 30 years to achieve the requisite cut of 95% off 1990 by 2050;
    – California has some of the most progressive culture, and industrial economy, of any US state, besides being among the wealthiest of states on the planet.

    So where’s the critique of this Californian charade ? Where’s the comparison with the 20% off 1990 that the EU has as a binding commitment ? Where’s the focus on the politics of legislating commensurate mitigation ?

    Too busy protesting the middle section of an oil export pipeline (only 54 million & counting bits of global fossil infrastructure to go) ?

    Like the Papuan delegate told the US chief negotiator at Bali –
    “Its time to lead, follow, or get out of the way.” Its up to US environmentalists as to which of these the US ends up doing, and crucially, how soon.



  7. Joe Romm says:

    Your silliest comment ever. Given that CA grid has half the co2 intensity of the u.s. Grid, this is an impressive goal — doubly so because they have enshrined the 80% cut by 2050 into law.

  8. Lewis Cleverdon says:

    That is as rude and tangential as any of your comments I’ve seen. If a state as wealthy as California, and with California’s historic carbon debt, can’t do better than cutting 0% off 1990 by 2020, why should other nations lift a finger to do better . . . .
    If you think America is right to renege on its solemn commitment to “common but differentiated responsibilities” in terms of GHG control, maybe it’s time to say so.

    Your abuse of people with whom you disagree constrains free discussion and does the site no credit.