Comment Log Display

	Thank you for the opportunity to comment.  California is a leader
in fighting global warming and in making the transition to a green
economy, to its benefit and to the world’s, and I greatly
appreciate the historic role the Air Resources Board has played in
this process.  
        I urge you to keep California at the forefront by replacing
the cap and trade approach embodied in AB32 with a carbon fee (tax)
and rebate program.  Citizens Climate Lobby and affiliated groups
can assist CARB in this process, if you will contact me.

1. Issues with cap and trade
	Inventors of the cap and trade approach are skeptical of its
effectiveness to regulate carbon.  Writing in the San Francisco
Chronicle last January, David R. Baker pointed out well-known
issues with cap and trade, especially when the scheme includes
offsets (paraphrased and augmented):
•	It’s complicated, and experts are likely to game the system and
stay ahead of safeguards;
•	Legitimate trading strategies can exacerbate energy price
spikes;
•	Allowing businesses to meet emission reduction quotas by
purchasing offsets from projects that aim to reduce CO2 elsewhere
is deeply controversial – it is difficult or impossible to verify
that offsets represent the additional emissions reductions they
claim;
•	Secondary trading markets based on emissions allowances pose
derivatives risk.  The term “subprime carbon” has been used in
describing new vehicles that could develop.
        At the very least, California will spend time and resources
designing and maintaining multiple safeguards, and trading services
will be among the system’s costs.  The European Union’s experience
with cap-and-trade includes harmful price volatility, few
greenhouse gas reductions, higher energy prices and billions in
windfall profits for utilities.

2. Simple carbon fee and rebate will drive clean energy transition,
make consumers whole
        The principal reason for continued widespread use of fossil
fuels and their CO2 emissions is that they remain relatively cheap
compared to clean, renewable energy sources.  Applying a steadily
rising fee on the carbon content of fossil fuels at the source –
the well, mine or point of entry – is the simplest, most effective
market-based approach for leveling the playing field and driving
clean energy investment by providing businesses with a predictable
carbon price.  As a complementary policy, fossil fuel subsidies
should be phased out.
	Fee revenue should be rebated to Californians to make fossil
energy prices affordable during the energy transition.  Rebate
options include monthly dividend checks, lower income tax rates,
and reductions in payroll taxes.  The last option is regarded as
one of the best ways to stimulate employment; if it is used people
who are not working must be addressed.  The program can be
administered by existing State agencies such as the Franchise Tax
Board.
        Switching from cap and trade to carbon fee and rebate need
not delay California’s anti-pollution efforts.  British Columbia’s
carbon tax was implemented in 2008 within months of adoption.

3. California’s national, international influence
        California’s adoption of carbon fee and rebate would
increase its acceptance by the US Congress, where cap and trade has
not passed; in recent visits to Capitol Hill Citizens Climate Lobby
found interest in a carbon fee and dividend program.  The world is
waiting for US leadership; thus, California could catalyze an
international carbon reduction and clean energy revolution.  A
carbon fee approach is preferable for international harmonization -
not every country has the capability to administer a cap and trade
program, but every country has a tax system.  
        For illustrative purposes I have attached Citizens Climate
Lobby’s proposed federal legislation.  Please contact me if you
have any questions.  Thank you.