I am disappointed that the Scoping Plan plans for California to
reach carbon neutrality only by 2045, and that it envisions a
reduced role for the state's landmark cap-and-trade program. While
2045 is the legally mandated deadline, if the cap-and-trade program
was expanded and made more stringent, California could feasibly
reach carbon neutrality years earlier. As it happens, I recently
wrote my BA thesis on the cap-and-trade program (attached if anyone
is interested). My overall conclusion is that cap-and-trade in
California has been both effective and economically efficient at
meeting the state's 2020 GHG emissions target, especially as
compared to the state's other climate policies that employ a more
command-and-control approach (as opposed to cap-and-trade's
market-based mechanism). Of course, California met its 2020 target
of reducing GHG emissions to 1990 levels four years in
advance.
I do argue that the cap-and-trade program can, and almost
certainly should, be strengthened so that it can have a greater
effect on GHG emissions, ahead of California's 2030 emissions
target of 40 percent below 1990 levels. My thesis suggests ways
this can be done (p. 79-80), such as reducing or ending the
awarding of emissions permits to refineries, changing the holding
limit formula so that the limit on banking emissions permits
declines at a faster rate, and strengthening the regulations on
resource shuffling that aim to prevent emissions leakage to
neighboring states. That being said, a stronger role for
cap-and-trade in the 2022 Scoping Plan would be a more effective
way to meet future climate targets, and cheaper to implement, than
more prescriptive policies. Command and control policies should
focus on sources of emissions that the cap-and-trade program does
not affect so easily, such as transportation or short-term GHG
pollutants (like methane).
My thesis also cites research (p. 54-57) suggesting that,
overall, California is doing an effective job at protecting
low-income households from price increases due to corporations
passing the costs of cap-and-trade onto consumers. As this UCLA
study
(https://innovation.luskin.ucla.edu/wp-content/uploads/2019/03/Protecting_the_Most_Vulnerable.pdf)
put it: "The state is effectively protecting low-income
Californians from Cap-and-Trade compliance costs passed through
from electric, natural gas, and gasoline providers." Much of these
savings that compensate for price increases come from state
programs that are funded through cap-and-trade revenues;
California's climate regulations cannot similarly offer a
"built-in" revenue-raising mechanism that allows for further
initiatives to reduce emissions and promote equity.
I would also point CARB to this post by Meredith Fowlie,
director at UC Berkeley's Energy Institute at Haas, that makes the
case for cap-and-trade very well:
https://energyathaas.wordpress.com/2022/05/16/whats-the-plan-for-carbon-pricing-in-california/.
Perhaps CARB is concerned about the political vulnerabilities of
cap-and-trade. To be blunt, that should not be a concern. CARB's
task is to focus solely on designing the best policies possible;
let the politicians defend them. CARB's expertise on combatting air
pollution is a role model for the nation and even the world, and a
stronger cap-and-trade program would continue that legacy. I don't
think it is an exaggeration to say that, at this critical time,
with meaningful climate action at the federal level stalled, the
whole world is watching.
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