Comment Log Display

Madam/Sir

I am writing to express my concern over the State of California's
(SOC) policy regarding its ZEV program.  To date, the SOC has
denied the public access to automaker credit trading information. 
As an economist I find this behavior alarming, as it leads to less
than optimal markets.

A trading market, such as that set up in the ZEV program, is
designed to facilitate compliance in the most efficient manner
possible.  For some automakers, producing zero emission vehicles
is easier, cheaper, or within their product plans. They can sell
ZEV credits to those automakers whose ZEV production will take
longer or for which it is more expensive to produce such vehicles.
 However, the benefits of a trading market are gained only when
both buyers and sellers have full information.  Allowing trades to
be kept confidential facilitates price fixing and collusion,
hampering the efficient functioning of the market and distorting
the pollution reduction goals of the ZEV program.  Allowing
confidential trading also prevents the public from overseeing and
ensuring a non-fraudulent market.  In order for the SOC to fully
implement the ZEV program, it needs to make public all information
on credits it currently holds confidential. 

The importance of fully open trading markets in every credit
trading system cannot be sufficiently stressed.  This same Board
is considering the creation of a pollution credit trading system
for greenhouse gas emissions.  Trading pollution credits is only
possible in an open market such as we see at the Chicago Climate
Exchange (CCX).   Maintaining secrecy of trades not only limits
market opportunities but can hurt business.  

These principles are extremely important as the State moves toward
adopting a pollution trading system for greenhouse gas emissions. 
Setting a state precedent for withholding credit trading
information will hamper the effectiveness of a greenhouse trading
market.  The importance of open trading markets was recently
signaled by the Chairman and CEO of the Chicago Climate Exchange,
Dr. Richard L. Sandor: "We congratulate the pioneering initiative
of the great State of California, the legislature and the people
of California and know that implementing any emissions trading
that may ensue will require price transparency and efficient,
exchange-based systems for maximum success."  I fully agree with
Chairman Sandors' basic assumption regarding the need for
transparency in such a system.

In summary, I urge you to disclose fully all information you have
as it relates to emission credits you hold for automakers. 

Respectfully,
Sibylle Scholz, PhD
Agricultural Economist