IETA COMMENTS ON THE CARB 2022 Draft Scoping Plan Update
The International
Emissions Trading Association (IETA) appreciates this opportunity
to submit comments on the California Air Resources Board’s
(CARB) Draft 2022 Scoping Plan Update.
As the leading
international business voice on climate markets and finance, IETA's
non-profit organization represents over 200 companies, including
many facing climate risks and opportunities across the West Coast.
IETA's market expertise is regularly called upon to inform
market-based policies that deliver measurable greenhouse gas
reductions and removals, address economic competitiveness concerns,
and balance economic efficiencies with social equity and
co-benefits. Our mission is to support broad and functional carbon
markets, guided by the principles of efficient, low-cost,
measurable climate outcomes while ensuring environmental
integrity.
IETA appreciates the
tremendous effort undertaken by CARB staff and their contractors in
developing the scenario alternatives, modeling outcomes, conducting
extensive public outreach, and drafting the Scoping Plan Update.
1 Preferred
Scenario
The
modeling exercises undertaken via the Scoping Plan selects
scenarios and estimates outcomes resulting from those scenarios.
Unfortunately, the modeling exercises make no effort to optimize
for policy mixes that return a least-cost solution, which would
necessarily reflect a stronger role for the cap-and-trade program.
As such, IETA believes the Scoping Plan reflects political
preferences rather than optimized policies.
IETA appreciates that reducing California’s GHG
emissions is urgent and that California plays a political
leadership role domestically and internationally. As modeled,
scenarios that endorse a 2035 timeline carry serious questions
related to the high cost associated with the early retirement of a
vast inventory of existing equipment, replacement with equipment
that may not be available in the near term, as well as the
increased risk of leakage and negative economic and employment
impacts.
While we do not support any specific scenario selected by
CARB, we do view Alternative #3 as reasonable and achievable. That
said, IETA urges CARB to consider adding a further emphasis on
cap-and-trade into Alternative #3, as discussed in the next
section.
2
Role of
Cap and Trade
We
appreciate CARB’s statements in the Scoping Plan Update
affirming the continued critical role of Cap-and-Trade in getting
California to carbon neutrality. As we have stated previously, IETA
believes the Cap-and-Trade program should play a
“workhorse” role rather than a “backstop”
role in California’s climate change mitigation efforts. IETA
understands that the reduced role of Cap-and-Trade that CARB
foresees in the 2022 Scoping Plan Update is due to an increasing
number of legislatively and executive order mandated direct
regulations and prescriptive program requirements. However, it
remains our position that the most cost-effective path to carbon
neutrality would be for California to extend its Cap-and-Trade
program and establish caps that decline to net zero by
2045.
These caps should specifically provide for a way to
account for negative emission technologies (NETs) and approaches,
which the United Nation’s Intergovernmental Panel on Climate
Change (IPCC) finds are essential to achieving carbon neutrality.
Specifically, all climate models employed by the IPCC agree that
carbon neutrality by 2050 cannot be achieved without large scale
deployment of CCUS and carbon removal technologies, such as direct
air capture. IETA recommends that California reduce its dependence
on direct policies so that the Cap-and-Trade program can take a
central role by reducing more emissions at lower costs.
We
appreciate that CARB has the proper framework in mind for achieving
Carbon Neutrality by including both emission reductions and carbon
removal in their analysis. We look forward to working closely with
CARB in the event they open a Cap-and-Trade rulemaking as part of
the regulatory and programmatic alignment following the adoption of
the Scoping Plan Update. We’re eager to discuss how to
strengthen the program, remove market uncertainty through extending
the program, incorporate carbon removal, and protect the health of
all Californians.
We look forward to
close and frequent engagement with CARB staff and other
stakeholders over the coming months on ways to strengthen and
enhance the Cap-and-Trade program. Please direct comments or
questions to IETA’s West Coast Representative, John Blue (blue@ieta.org).