Comment Log Display

On behalf of the Silicon Valley Leadership Groups’ 375 members, I
am writing you to provide input on the development of the AB 32 cap
and trade auction revenue Investment Plan.  The Silicon Valley
Leadership Group, founded in 1978 by David Packard of
Hewlett-Packard, represents more than 375 of Silicon Valley’s most
respected educational institutions and high-tech, bio-tech, and
clean-tech employers; our members collectively provide nearly one
of every three private sector jobs in Silicon Valley.   As a
supporter of AB 32 since its inception, we are proud to offer our
comments below.  

General Principles
For both legal reasons and to ensure the success of AB 32, the
Silicon Valley Leadership Group supports the following general
principles to help guide the development of the Investment Plan. 

1. Nexus – Monies generated by the cap and trade auction program
should adhere to the legal precedent for use of regulatory fees
established by Sinclair Paint Co. v. State Board of Equalization
(1997), with a direct link to verifiable greenhouse gas (GHG)
reduction;   
2.Leverage private investment – Because cap and trade auction
monies are limited and the amount will vary over time, it is
important to leverage private capital resources and investment as
much as possible to advance the state’s goals;
3.Support innovation and diffusion – In meeting the GHG reduction
goals, the state must think both short- and long-term, focusing on
technology diffusion (short-term) while also addressing the need to
bolster support for research and innovation (long-term);   
4.Phasing investments: We support using early program monies to
advance deployment of clean and efficient energy and electric and
alternative fuel infrastructure; along with the Transportation
Coalition for Livable Communities, we believe that when fuels come
under the cap in 2015, these monies should help fund mass transit
and transit oriented development; 

In developing the Investment Plan, the state should provide clear
metrics for success (including performance and environmental
objectives) in meeting the 2020 GHG reduction goal and milestones
to track progress, while also providing a regular status report for
public review.  
 
Areas of Investment
The Leadership Group has identified areas in each of the broad
categories contained in the Governor’s budget where investments can
achieve significant GHG reductions and yield meaningful co-benefits
such as job creation and improved public health.  The areas
include: 

1.Clean and Efficient Energy and Next-generation Low-carbon
Transportation
Large scale clean technology development and deployment will help
reduce California’s reliance on fossil fuels and significantly
reduce the amount of GHGs the state produces.  Further, deployment
of these technologies will help create jobs across the state.

a.Sustainable Development Bank (“Green Bank”): Such a bank would
provide low interest loans, performance-based grants and/or loan
guarantees to those that  want to invest in clean energy, energy
efficiency, or electric and alternative fuel infrastructure. The
bank is important as adequate financing is one of the key obstacles
to the widespread deployment of clean and efficient energy
solutions. In effect, the Bank would help ease transition to a
clean economy by making clean and efficient energy technologies
more cost competitive with fossil fuels.   

We believe the Bank should be structured as a public-private
partnership and as such, could better leverage private capital (we
believe at up to a 10:1 ratio) in a fashion that mitigates
investment risk, catalyzes market activity and lowers borrowing
costs. The Sustainable Development Bank will enable innovative,
commercially viable clean-energy technologies in such areas as
wind, solar, geothermal, advanced biomass, increased efficiency,
and clean and efficient transportation infrastructure and
deployment of next-generation electric vehicles —to be deployed at
greater scale. 

The Bank should support deployment in a technology neutral fashion,
so that the state is not in the role of picking winners and losers.
The Bank should take into account and coordinate with new programs
that are currently being implemented such as Prop 39 and other
ongoing state programs.  Finally, we believe the state can create
an effective Sustainable Development Bank using a relatively small
amount of funding (approximately $100 million) per year.

b.Existing Programs with GHG Reduction Benefits: The state has
existing programs with proven GHG reduction benefits.  Investing in
these programs would allow the state to quickly achieve near-term
GHG reductions through existing channels by avoiding the time it
takes to create entirely new programs.  Existing vehicles that
could benefit from new funding include such as  PACE programs,
distributed generation deployments, clean energy generation and
energy efficiency upgrades at public facilities, clean and
efficient transportation infrastructure, and deployment of
next-generation electric vehicles.  Examples include:
•Commercial PACE programs 
•California Solar Initiative (set to expire by 2017)
•Energy efficiency retrofit and rebate programs
•Emerging Renewables Program / Self Generation Incentive Program 
•New Solar Homes Partnership 
•AB 118 Program  

c.New Programs with GHG Reduction Benefits: We agree with Clean
Energy Working Group that the state should invest in new programs
to help remove key barriers to clean and efficient technology
deployment.  These investments should be overseen by a single state
agency and coordinated with existing programs.  Gaps exist in the
following areas: 
•Implementation of home/business energy efficiency, energy
management and demand response technologies through rebates;
•Funding to accelerate and demonstrate integration of distributed
generation and energy storage technologies with existing smart grid
systems; 
•Market facilitation for emerging technologies to help bridge the
“valley of death”; 
•Incentivize utilities and/or third parties to adopt and deploy
smart grid-connected EVs; 
•Direct grants for state/local investment in distributed generation
- i.e. schools;  
•Financing to encourage agricultural biogas production for the
pipeline.

d.Green Prize to Spur R&D to Help Reach 2050 Goal: Deployment of
existing technology, even at scale, will not enable California to
reach its goal of reducing GHG emissions to 80 percent below 1990
levels by 2050, according to the California Council on Science and
Technology.3  The report states that achieving this goal will
require "intensive and sustained investment in new technologies.” 
Thus, we believe the state should consider creating a “Green Prize”
which would help spur innovation in groundbreaking technology in
any of a number of areas such as large-scale, commercially viable
carbon sequestration.4   The “Green Prize” should complement the
already existing EPIC program, which supports R&D, but currently
will not fund research on carbon reduction, at least in the
upcoming program cycle. We believe the state could create an
effective Green Prize using a relatively small amount of funding
(approximately $5 - 10 million) per year. Finally, we believe this
effort would best be administered by a non-profit, working in close
coordination with the state. 
 
2.Natural Resources Management
Climate change is already leading to rising temperatures, increased
rainfall variability, rising sea levels and other climatic changes
such as more extreme weather events. It is critical for the state
to begin addressing the impacts of current climate variability and
future climate change by investing in natural resource measures
that provide the co-benefits of GHG mitigation via sequestration
while also helping the state prepare for a very different future. 

We agree with a consortium of leading natural resources groups
including the Nature Conservancy, the Pacific Forest Trust, etc.,
that some portion of the pollution fee dollars should support
natural resources management activities that sequesters GHGs,
whereby atmospheric carbon or methane is incorporated into plants,
soils, and water.  Highly productive sources of carbon
sequestration include wetlands, forests and watersheds. 

a.Forest Conservation and Restoration: California forests and
vegetation remove vast amounts of carbon dioxide from the
atmosphere.  Forest conservation and, especially reforestation and
afforestoration programs have the capacity to reduce GHG emissions
and achieve multiple public and environmental benefits, including
the protection of air and water quality, fish and wildlife habitat
and recreation.  Key programs that should be identified in the
Investment Plan include:
•California Forest Improvement Program administered by CAL FIRE
•Working Forest Conservation Easement programs including CAL FIRE’s
Forest Legacy;
•Program, the Wildlife Conservation Board’s (WCB) Forest
Conservation Program;
•The Sierra Nevada Conservancy, Tahoe Conservancy and State Coastal
Conservancy.

b.Wetlands and Watershed Restoration: Wetlands and watershed
restoration efforts in the Sacramento San Joaquin Delta, the San
Francisco Bay and elsewhere provide opportunities to reduce methane
and carbon dioxide emissions while also sequestering additional
GHGs.  These efforts can also help reduce land subsidence, protect
areas from sea level rise, and enhance water quality. Existing
State programs that could immediately supports these efforts
include:
•The Inland Wetlands Conservation Program administered by the
Wildlife Conservation Board;
•The Delta Conservancy and State Coastal Conservancy;
•The Watershed Program administered by the Department of
Conservation.

3.Sustainable Infrastructure Development
Our land use patterns drive heavy greenhouse gas emissions from the
transportation sector. Between 1975 and 2004, the number of miles
driven by Californians increased more than 3% per year. In
contrast, California’s population growth was less than 2% per year
during the same period.5  Doubling neighborhood density can reduce
both vehicle trips and the number of miles driven by about 5%. 

SB 375 required regional planning agencies to create a plan for how
transportation and land use could reduce greenhouse gas emissions.
The Leadership Group supported the legislation and is working to
implement the bill at regional and local levels. The major
challenge in the process is obtaining local buy-in. Local cities
and counties push back on issues like tying transportation funds to
future housing production or planning for more homes. Communities
cite challenges such as reduced money for affordable housing and
inadequate sewer and school infrastructure as impediments to
building compact infill.

Therefore, we agree with the Transportation Coalition for Livable
Communities that auction revenues derived from vehicle fuels should
be used to fund transportation system needs in a way that achieves
AB 32 objectives and builds on the framework of SB 375.  Based on
research, the proposed Livable Community Infrastructure Program
would leverage a cost effective investment portfolio across
transportation efficiency measures, land use incentives, and
improved transportation options to yield the greatest GHG
reductions associated with the transportation sector.

We support an array of transportation efficiency and land use
incentives and improvements put forward by the Coalition,
including: 
a.Transportation efficiency measures:  
•	Network and demand management (e.g. transit/bike priority
signalization; trip reduction programs; roundabouts/roadway
modifications; congestion pricing);
•Transit service, maintenance and operating costs (e.g. Bus Rapid
Transit);
•Increase funding for bike networks and pedestrian amenities, with
an emphasis on bicycle and pedestrian connections to transit;
•Multi-modal network connectivity to reduce travel distances and
improve access to parks, schools, jobs, housing, and markets for
rural and urban communities (e.g. neighborhood scale planning); 
•Augment funding for alternative fuel programs that promote the
mass adoption of new technologies; 

b.Land use incentives and improved transportation options:  
•Funding to develop and implement land use modifications to support
regional plans (e.g. updating zoning codes, parking standards,
Level of Service policies);
•Other community infrastructure (e.g. water, sewer, greening) to
support Transit Oriented Development, affordable housing, urban
infill and small walkable communities in rural neighborhoods;
•Enact planning and zoning changes in Priority Development Areas.
•Reward jurisdictions with flexible infrastructure funds when it
approves compact homes and/or workplaces. This could be done
through a program like the One Bay Area Grant or Transportation for
Livable Communities; 
•Plan and build compact, affordable homes and dense offices near
transit paired with car-share memberships and transit passes.

We believe that investing in the areas detailed above, guided by
the principles we also outline, will help the state achieve
measureable GHG reductions in both the near- and long-term, realize
meaningful co-benefits, and help maintain public support for
California’s leadership in addressing climate change and clean air.
 

Our members appreciate the opportunity to submit comments on this
important matter and look forward to working with you as the state
continues to develop both the Investment Plan and the Expenditure
Plan.