Comment Log Display

January 11, 2010

Ms. Lucille Van Ommering 
Climate Change Cap-and-Trade Section 
California Air Resources Board 
PO Box 2815 
Sacramento, CA 95812 

RE: Comments Regarding the Preliminary Draft Regulation for a
California Greenhouse Gas Emissions Cap-and-Trade Program 

The California Farm Bureau Federation (CFBF) and the California
Cattlemen’s Association (CCA) appreciate the opportunity to submit
the following comments regarding the Preliminary Draft Regulation
(PDR) for a California Cap-and Trade Program. 

CFBF is a non-governmental, non-profit, voluntary association that
represents agricultural interests throughout the state of
California and works to find solutions to the challenges faced on
farms and in the rural community. Farm Bureau is California’s
largest farm organization, comprised of 53 county Farm Bureaus
currently representing approximately 85,000 members in 56 counties.
We strive to protect and improve the ability of farmers and
ranchers engaged in production agriculture to provide a reliable
supply of food and fiber through responsible stewardship of
California’s resources. 

CCA is a statewide trade organization representing California’s
$1.85 billion beef industry and all industry sectors from pasture
to harvest. Ranchers and beef producers are stewards of our
nation’s natural resources and own and manage nearly 32 million
acres of California range and forestland providing numerous
environmental benefits to include carbon sequestration. 

The structure of the cap-and-trade program will have significant
impact on the future of California’s family farms and ranches
because they utilize the products and services of many of the
entities subject to the mandatory greenhouse gas emission
reductions. The fuel and electricity providers that provide our
energy inputs and the food processors that add value to the
numerous agricultural commodities grown in California will have to
pass along even more exorbitant price increases than previously
anticipated unless there a number of significant changes in the PDR
as noted below: 

Offsets:
We believe that the most cost-effective approach to achieving the
emission reduction goal of AB 32 is via a well designed market
program that includes a robust offsets program, one with no
geographic or quantitative limits.  We are very disappointed that
the PDR proposes very limited use of offsets and counter to the
adopted Scoping Plan is even contemplating limiting those offsets
geographically.  Such offset restrictions will likely prevent
interest and investment in innovative emissions reductions projects
in uncapped sectors, which is a significant missed opportunity for
climate change mitigation.  
 
This extreme limitation will result in the loss of
cost-containment from the use of offsets especially in the early
stages of a cap-and-trade program, when new technologies and best
practices are still being developed and implemented by capped
sectors.  The result will be increased costs of the entire
cap-and-trade system and a loss of flexibility during the
transitional years post-enactment.

Further, the described approach for development and enforcement of
offset protocols is so bureaucratically intensive that it is highly
likely that very few authorized/approved offsets will be available
for the first compliance period 2012 to 2015 and possibly even up
to 2020.  If the state’s cap and trade program is to truly be
cost-effective, CARB must find a way to authorize or approve
worldwide offsets with minimal bureaucratic hurdles.   Real,
permanent, quantifiable, verifiable and additional offsets that are
recognized by other emissions trading systems (like the EU ETS)
should be automatically accepted for use in California.

Cost Containment Principles:
We do not agree that the cost containment mechanisms identified in
the PDR will be effective.  A robust offsets program along with
viable linkage to other programs is the best way to achieve the AB
32 emission reduction goals in the most cost-effective manner.
While some of the soft collar options propose additional
availability and use of offsets beyond the contemplated 4% limit
they will not result in cost-containment in a timely manner since
the planning, implementation, and execution of most offset projects
takes a long time to complete and achieve.  The soft collar options
would need to be signaled and directed years before the offset
credits would be required to realistically ease costs. 
	
Linkage:
One way to address the availability of plentiful offsets is via
linkage to other programs.  Unfortunately, the linkage criteria
contemplated in the PDR is so stringent that linkage to other
programs (even to the WCI) will be so difficult as to make linkage
practically impossible.  CARB must streamline the linkage criteria
to allow California’s program access to credits and offsets in
other programs worldwide.  One of the goals for AB 32 was as a
model for the world – that can only happen if California is able to
link with other programs
 
Accelerating Transportation Fuels into Cap and Trade by 2012:
We strongly oppose the acceleration of including fuels –
transportation fuels and natural gas – under the Cap and Trade
Program from 2015 to 2012.  CARB is already imposing the LCFS as an
early action on the transport sector which will incur its own
significant costs and concerns regarding the potential impact on
energy supply. These must first be carefully analyzed before
further steps on put on the fuel supply of this state.  

Auction - Transitional Issues:
We believe that CARB has limited authority to conduct anything but
a minimal auction to cover administrative costs.  Further, even if
CARB had broader authority to conduct a more significant auction
(via legislative authorization), they must transition from a
minimal auction to a more significant auction over the life of the
program. CARB must fully consider the potential impact on the
economy considering that all capped facilities would have to
generate $14 to 30 billion in a 100% auction at a carbon price of
$20 to 40/ton.

Capped Sources:
During the second phase of cap and trade implementation, ARB has
proposed to lower the emission threshold to capture additional
businesses that emit greenhouse gases through fossil fuel
combustion or the use of natural gas. We are concerned that
lowering the threshold below 25,000 MT CO2e could then require a
number of California farms and ranches to be capped sources.
Throughout the AB 32 implementation process, ARB has looked to
production agriculture to potentially provide offsets for capped
sources to achieve the state’s greenhouse gas reduction targets.
Dramatically lowering the threshold will weaken the ability for
production agriculture to provide real and accurate offsets to help
capped sources more cost effectively comply with reduction targets.
We oppose production agriculture being included as a capped sector
in the second compliance period starting 2015. 

 
We will continue to participate in this regulatory process and
appreciate your attention to our concerns. 

Cynthia L. Cory 						
Director, Environmental Affairs 				
California Farm Bureau Federation 				
1127 11th Street, Suite 626					
Sacramento, CA 95814 						

 
Justin T. Oldfield
Director of Regulatory Affairs
California Cattlemen's Association
1221 H Street
Sacramento, CA 95814