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Comment 224 for Draft 2022 Climate Change Scoping Plan (scopingplan2022) - Non-Reg.

First NameBenjamin
Last NameReicher
SubjectStrengthen the role of cap-and-trade in the 2022 Scoping Plan!

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 ( 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:

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. 

Original File NameThesis_Ben Reicher.pdf
Date and Time Comment Was Submitted 2022-06-24 10:38:41

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