Author Archives: Derek Walker

Decision makers at every level across California should take notice of today’s affirmation that the public supports California’s efforts to respond to the causes of climate change.

The results from the newly released Public Policy Institute of California’s annual survey of Californian attitudes towards the environment speak loud and clear: The majority of Californians see global warming as a serious threat to the state’s economy and their future quality of life and they continue to support measures to reduce green house gas emissions through the state’s cap and trade law.

Since the poll also revealed that many Californians think not enough is being done on this issue – particularly at the federal level – those in a position to make policy changes should take this poll as a call to action to address what the public sees as a major threat to their lives and livelihoods.

That’s not to say that significant efforts aren’t already underway. In addition to California’s visionary cap and trade law about to go into effect at the beginning of next year, the state just released its third assessment of our climate change vulnerabilities – a reminder that in addition to reducing our emissions we must also prepare for the climate impacts that scientists tell us are still to come.

Highlights from the PPIC poll include:

• A majority of likely voters say global warming is a serious threat (40% very serious, 26% somewhat serious) to the economy and quality of life in California’s future.
• 62% of likely voters support the state’s cap and trade law to reduce greenhouse gas emissions.
  • Four in ten Californians say efforts to reduce greenhouse gases will result in more jobs.
• 64% of likely voters say steps need to be taken right away to counter the effects of global warming.
• 53% of likely voters say the federal government is not doing enough to address global warming.
• 42% of likely voters say state and local governments are not doing enough to address global warming.
• The majority (78% of Californians and 73% of likely voters) is in favor of increasing federal funding to develop wind, solar, and hydrogen technology. That support is reflected across political party lines.

So the science is in, and so is public opinion. Our leaders have every incentive they need to take sustained and decisive action to kick start economic growth by moving forward with California’s groundbreaking climate law.

Despite the Durban climate talks ending with little progress beyond launching negotiations of a new agreement by 2015 that encompasses all the major emitters, momentum for carbon markets continues to grow from the ground up. Case in point: Canada’s second largest province, Quebec. 

Just three days after Canada announced it was dropping out of the Kyoto Protocol, Quebec announced it was going forward with a cap-and-trade program tied to California’s.

It was little surprise that Canada would renege on its commitment to cut climate pollution because it had done little to meet the treaty’s targets. And while its move was harshly condemned at home and abroad as ‘irresponsible’ and ‘reckless’, the news was offset by progress that’s being made at the sub-national level.

Quebec and California are part of the Western Climate Initiative (WCI), a partnership of states and provinces pledging to fight climate change by putting a price on pollution. Other Canadian provinces in the WCI, including British Columbia and Ontario, are actively developing carbon market programs.

Quebec is the latest entity to join climate’s ‘cap-and-trade club’ that counts the European Union, Japan, New Zealand, the Regional Greenhouse Gas Initiative (RGGI) and Switzerland as members. China and South Korea are among the countries that are exploring starting cap-and-trade programs. The United States used cap-and-trade to notable success in the ‘90s to cut acid rain faster and at dramatically lower costs than predicted by industry.

With extreme weather events linked to climate change on the rise, along with public support for solutions, Canada is joining the United States in refusing to deal with the most pressing environmental issue of our lifetime.  Fortunately, Quebec and California are leading the charge to cap and reduce pollution, an approach proven to deliver great economic and public health benefits. 

A recent study on the economic benefits of RGGI in the first three years found that the region’s economy grew by $1.6 billion, produced $1.3 billion in energy savings to consumers and created more than 16,000 jobs. 

Sub-national governments have become the hotbeds of leadership and progress on climate change, proving that taking action grows their economies while protecting the environment. We must not let the hope of a perfect (global agreement) become the enemy of the urgent (taking concrete action to fight climate change).

Fortunately, when it comes to climate and energy policies, what happens in California doesn’t stay in California.

Yesterday the Obama Administration announced a second phase of national greenhouse gas and fuel efficiency standards—covering passenger vehicles and light-duty trucks for model years 2017-2025—that California played a key role developing. California also announced new Advanced Clean Cars package to deliver cleaner air, slash greenhouse gases, rapidly increase numbers of zero-emissions vehicles. 

Yesterday’s announcements represent a key step forward in addressing our fundamental economic, energy and environmental priorities.

The federal standards are expected to result in at least $1.7 trillion in savings, reductions of an estimated 2.2 million barrels of oil a day by 2025 and 6 billion metric tons of climate pollution. California’s package—covering cars and light-duty trucks for model years 2012-2025 will likely result in having 1.4 million zero-emission vehicles and plug-in hybrids on the road in 2025 with savings of $5 billion that same year for consumers and businesses.

Consumers and businesses are rightly concerned about our dependence on imported oil and rising energy prices. Setting new greenhouse gas and fuel efficiency standards will address those concerns by saving them money and creating a healthier environment. 

The new auto standards are widely supported by a diverse coalition of automakers and the United Auto Workers, as well as businesses, consumers, veterans, health and environmental organizations. These standards will help create jobs, grow our economy, break our addiction to oil, save consumers trillions of dollars at the pump and dramatically cut climate change pollution.

 This is great news for Americans in every state and further proof that California serves as the model for climate change policy.

That is an editorial headline in today’s Baltimore Sun about a new study demonstrating the economic benefits of the Region Greenhouse Gas Initiative (RGGI) cap-and-trade program.

The money quote:

"There are any number of lessons that can be drawn from this. But perhaps the most important is that as a market-based solution, a cap-and-trade program, can work well and deliver real economic value to participating states.’

The New York Times covered the findings under the headline, ‘Carbon Trading Initiative a Success, Study Says’ and illustrates how the program has saved money for consumers, stimulated job growth and kept money in local economies in the six New England states, New York, New Jersey, Maryland and Delaware.

The bottom line: the investment of revenue from RGGI allowance auctions have yielded $1.6 billion in net economic value to the regional economy and generated 16,000 jobs.

What’s more, every household and business in the region can expect to benefit from the RGGI system: The study estimates that the average home will save $25, and that owners of commercial and industrial buildings that use a lot more energy per meter than homeowners will save $181 and $2,493, respectively.

Other key findings:

• Customers are expected to save nearly $1.1 billion on electricity bills, and an additional $174 million on natural gas and heating oil bills, for a total of $1.3 billion in savings over the next decade through installation of energy efficiency measures using funding from RGGI auction proceeds to date
• Reduced demand for fossil fuels keeps more than $765 million in the local economy

Power plant owners experience $1.6 billion in lower revenue over time, although they overall had higher revenues than costs as a result of RGGI during the 2009-2011 period.

The new study offers a taste of what California, which just unanimously approved its cap-and-trade program that goes into effect in 2013, can look forward to.  The Golden State has already experienced a dramatic increase in clean technology investments and jobs in the five years since our climate change law passed.

Late last month, a story in Reuters' Point Carbon ran under the headline, "California Governor Backs Carbon Market." The state’s Air Resources Board recently completed a legal analysis comparing cap-and-trade with other alternatives. The board will vote on the analysis at its August 24 hearing and is widely expected to reaffirm cap-and-trade as the “preferred regulatory approach over a carbon tax or a mix of policies.” 

Other recent developments further bolster the case for cap-and-trade.  A study and article in the Energy Journal entitled, "Inducing Clean Technology in the Electricity Sector: Tradable Permits or Carbon Tax Policies?", favorably compares cap-and-trade to a carbon tax.

The study conducted by UC-Merced and the University of New South Wales found that cap-and-trade will “trigger adoption of clean technologies at a considerably lower level of carbon prices” compared with a tax system. The authors used various models to test a scenario in which a small firm that owns a coal-fired plant considers investing in clean technology to provide electricity for its customers.

A savvy climate blogger who writes for Grist covered the study under the headline, "Cap-and-trade could spur faster cleantech investment than carbon tax." He concludes that clean tech investment happens faster in the short term when you have a cap-and-trade system in place, in part because volatility in future permit prices will likely induce suppliers (such as the owner of the coal-fired power plant) to take early actions to hedge against carbon risks.

A second piece, "The case for cap-and-trade", was published by the Property and Environment Research Center. It made the point that, “Reducing excessive pollution is a legitimate purpose of government, but the guiding principle should be to do so in the least obtrusive, least heavy-handed way possible.” The authors point out that market-based approaches have three advantages over command-and-control regulations:

1. They create flexibility in who cuts pollution. Industrial facilities that find it easy to reduce emissions can save money by making extra cuts and selling unused pollution rights, while those facing steep abatement costs can pollute more.
2. Market-based approaches create flexibility in how cuts are made. Plant managers, who know their business better than anybody in Washington, are given freedom to make the cuts however they choose. 
3. Market-based approaches create incentives for entrepreneurs to find ways to reduce pollution more efficiently.

The article ends by saying that, “Whatever their feelings about applying it to carbon, conservatives and free market liberals alike can cheer the cap-and- trade approach to pollution as a victory for their ideals.”

California’s cap-and-trade system, which begins in 2013, applies many of these lessons and should serve as the model for innovative, market-based environmental policies in the future. California officials recently pushed back enforcement of the cap-and-trade by one year, giving the state more time to hone the regulation while keeping its environmental and economic goals (and resulting benefits) completely intact.