{"id":4194,"date":"2010-01-07T15:54:18","date_gmt":"2010-01-07T23:54:18","guid":{"rendered":"http:\/\/blogs.kqed.org\/climatewatch\/?p=4194"},"modified":"2010-01-07T15:54:18","modified_gmt":"2010-01-07T23:54:18","slug":"state-senators-hear-cap-and-trade-caveats","status":"publish","type":"post","link":"https:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/","title":{"rendered":"State Senators Hear Cap-and-Trade Caveats"},"content":{"rendered":"
\"Craig
Photo: Craig Miller<\/figcaption><\/figure>\n

The dark underbelly of cap-and-trade was somewhat exposed in a four-hour hearing today before the Senate’s Select Committee on Climate Change and AB-32 Implementation<\/a>. AB-32, of course, is shorthand for California’s Global Warming Solutions Act<\/a> of 2006, which mandates a carbon trading program be in place by 2012.<\/p>\n

Here’s my “highlights reel” from the panel of experts who testified, in order of appearance:<\/p>\n

Mary Nichols, Chair, California Air Resources Board<\/strong><\/p>\n

– On carbon pricing: “There is no approach that does not involve administrative costs & headaches” but cap-and-trade “seems like a pretty good mix” of certainty provided by an enforced cap and market flexibility (versus an outright carbon tax of some sort).<\/p>\n

– On California going “solo” with carbon trading (i.e. without the other states and provinces currently signed to the Western Carbon Initiative): The larger the territory, the more potential for “bad actors” but the greater the potential for meaningful savings & benefits to the economy.<\/p>\n

Michael Wara, Stanford Law Professor<\/strong><\/p>\n

– On carbon offsets: “…difficult to administer;” to ensure real reductions, changes in behavior, has proven to be “a significant and ongoing challenge, in practice.”<\/p>\n

– California appears to be “opting for prudent limits” on allowable offsets, at an anticipated 4%, versus more than 30% in the Waxman-Markey bill that has cleared the US House of Representatives.<\/p>\n

– “Very few [offset] programs have been run without controversy.”<\/p>\n

Ken Alex, California Attorney General’s Office<\/strong><\/p>\n

– On enforcement: “Every system has cheaters, especially where billions of dollars are involved.”<\/p>\n

– Cap-and-trade provides “a permanent incentive for cheaters.” Unassailable data is essential for regulators.<\/p>\n

– Regulators “must have sufficient authority” to assess meaningful penalties. Alex, who was involved in sorting out the state’s energy crisis of 2000-2001, recalled that “million-dollar penalties were irrelevant.”<\/p>\n

Dallas Butraw, Economist, Resources for the Future<\/strong><\/p>\n

– Warned against a “phone book-sized” regulation.<\/p>\n

– Cost of carbon emissions permits will be passed along to consumers but could be offset by tax breaks or a dividend system similar to what oil & gas companies pay to residents of Alaska.<\/p>\n

David Harrison, Economist, NERA Economic Consulting<\/strong><\/p>\n

– On lessons from Europe: Despite a rocky start for the EU’s “pilot” program, the system for carbon trading in 27 countries has “evolved over time” to become “very successful.”<\/p>\n

– The EU experience “really does show that cap & trade works. Emissions have been reduced.”<\/p>\n

– There is “no silver bullet” for determining allocations; that in Europe has been a “messy” and “contentious” process.<\/p>\n

– In spite of it all, the EU experience demonstrates that cap-and-trade is “not perfect but it really is better than the alternatives,” and provides a good laboratory for California.<\/p>\n

The committee, chaired by Fran Pavley<\/a> (D-L.A.), also heard from several business and environmental groups. At one point a speaker from the Natural Resources Defense Council (NRDC) argued briefly with a utility representative about whether electric rates are actually higher or lower in California, compared to the nation as a whole (apparent compromise: rates may be higher but average bills are lower).<\/p>\n

Utilities complained that the system, as proposed, forces power companies to bear the brunt of the burden. Business interests warned that unbridled implementation of AB-32 “could add to an already alarming increase in job losses,” claimed that the state has no authority to hold carbon permit auctions under AB-32, and asked for initial permits to be given away to industry. Environmentalists asked for the opposite, urging that 100% of initial permits be auctioned off, i.e. that emitters be made to pay for them.<\/p>\n

Numerous speakers expressed nervousness over validity of carbon offset programs. Regarding the various schemes for carbon storage in forests or soil, Assemblyman Jared Huffman (D-San Rafael) said “This one makes my head hurt.” There’ll be a lot of Excedrin passed around before this is through.<\/p>\n","protected":false},"excerpt":{"rendered":"

State lawmakers get a look inside the cap-and-trade sausage factory.<\/p>\n","protected":false},"author":221,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[34,74,79,85,179,193,435],"coauthors":[],"series":[],"affiliates":[],"programs":[],"collections":[],"interests":[],"class_list":["post-4194","post","type-post","status-publish","format-standard","hentry","category-government-business","tag-assembly-bill-32","tag-cap-and-trade","tag-carbon-capture","tag-carbon-offsets","tag-economics","tag-emissions","tag-policy"],"acf":{"template_type":"standard","featured_image_type":"standard","is_audio_post":false},"yoast_head":"\nState Senators Hear Cap-and-Trade Caveats | Climate Watch<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"State Senators Hear Cap-and-Trade Caveats | Climate Watch\" \/>\n<meta property=\"og:description\" content=\"State lawmakers get a look inside the cap-and-trade sausage factory.\" \/>\n<meta property=\"og:url\" content=\"http:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/\" \/>\n<meta property=\"og:site_name\" content=\"Climate Watch\" \/>\n<meta property=\"article:published_time\" content=\"2010-01-07T23:54:18+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/ww2.kqed.org\/climatewatch\/wp-content\/uploads\/sites\/54\/2010\/01\/Stacks_0113.jpg\" \/>\n<meta name=\"author\" content=\"Craig Miller\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@voxterra\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Craig Miller\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"http:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/\",\"url\":\"http:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/\",\"name\":\"State Senators Hear Cap-and-Trade Caveats | Climate Watch\",\"isPartOf\":{\"@id\":\"https:\/\/ww2.kqed.org\/climatewatch\/#website\"},\"datePublished\":\"2010-01-07T23:54:18+00:00\",\"dateModified\":\"2010-01-07T23:54:18+00:00\",\"author\":{\"@id\":\"https:\/\/ww2.kqed.org\/climatewatch\/#\/schema\/person\/f7222c517400a6c4b0336fca3652c323\"},\"breadcrumb\":{\"@id\":\"http:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"http:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"http:\/\/ww2.kqed.org\/climatewatch\/2010\/01\/07\/state-senators-hear-cap-and-trade-caveats\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ww2.kqed.org\/climatewatch\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"State Senators Hear Cap-and-Trade Caveats\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ww2.kqed.org\/climatewatch\/#website\",\"url\":\"https:\/\/ww2.kqed.org\/climatewatch\/\",\"name\":\"Climate Watch\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ww2.kqed.org\/climatewatch\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/ww2.kqed.org\/climatewatch\/#\/schema\/person\/f7222c517400a6c4b0336fca3652c323\",\"name\":\"Craig Miller\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ww2.kqed.org\/climatewatch\/#\/schema\/person\/image\/dd8f4f4f978df3faac9db4c510939ea0\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/b91661df645e001a9cafe0861fa685f9?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/b91661df645e001a9cafe0861fa685f9?s=96&d=mm&r=g\",\"caption\":\"Craig Miller\"},\"description\":\"Craig is a former KQED Science editor, specializing in weather, climate, water & energy issues, with a little seismology thrown in just to shake things up. 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