Comment Log Display

AB 32 Scoping Plan 
Ms. Mary Nichols
Chair
California Air Resources Board
1001 I St. 
Sacramento, CA 95814

Dear Ms. Nichols, honorable members of the Air Resources Board and
members of the Board staff;

Thank you for the opportunity to provide comments on the Draft
AB32 Scoping Plan.  As you may already know, The Climate Group
works at the State, National and International level to advance
business leadership on climate change.  Our business members
include many who were strongly supportive of AB32.  The Climate
Group would like to recognize California’s leadership on the
complex range of issues involved with successful implementation of
AB32, acknowledge the hard work and careful thought of the many ARB
staff members contributing to this document, and convey our general
support for this initial Draft Scoping Plan.  The following summary
remarks offer our suggestions for refinements, further thought, or
inclusion into the next revision of the Scoping Plan.  We look
forward to participating in future workshops and to providing
additional input. 
 
State Operations

The Climate Group (TCG) supports and applauds the state’s desire
to lead by example.  As important as this issue is, and
considering the potential long-term benefits, it is critical to
implement more detailed and complete Climate Action Plans for each
State agency or department, which would include such actions as:  
-	Conducting a comprehensive inventory of State buildings and plan
for systemic energy audits and cost-effective retrofit programs.
-	Encourage innovation and an appetite for accelerated change
among State employees by rewarding these behaviors; in performance
reviews, merit pay increases, bonuses, and other forms of
recognition.
-	Establish goals and measurable outcomes by State agency and the
State overall.  
-	 Including creation and periodic updates of supporting state
policies such as “green” procurement plans, contracting and
purchasing rules.

Clearly, many of these elements tie back to the assessment of the
State’s carbon ‘Shadow’ and can, when implemented, create profound
change.

The acknowledgement of the State’s “Shadow” footprint is very
important, and TCG would like to recognize the State’s leadership
and vision in including this important aspect.  Please consider
framing the evaluation of this in a much more comprehensive and
formalized manner. In fact, the complexity of this issue seems to
call for a separate ‘scoping plan’, as thorough and detailed as
the initial AB32 Scoping Plan itself.  TCG strongly encourages a
deep and detailed assessment, utilizing the expertise of the
State’s economics expertise in academia, and including the State’s
income, business, sales and property tax agency representatives at
State and local levels.   There must be a structural alignment of
fiscal, tax and business-related policy with climate policy in
order to create broad and effective change. 

In order to be most effective, and to integrate data from state
and regional work on climate change and other environmental
programs, TCG strongly recommends that the State consider
utilizing (or encouraging the utilization of) a web-based, visual
and interactive, ‘real time’ display of the status of the State’s
attainment of its climate (and other environmental) goals.  

Cap and Trade

TCG supports the diverse set of market-based emissions reduction
mechanisms presented in the Scoping Plan, including:
-       Cap and Trade, with
    o	no artificial price caps or other safety valves (except
offsets); 
    o	the ability to link to and be fungible with other compatible
frameworks nationally and internationally, with a view to creating
a large and liquid international market;
-	Implementing rigorous standards for regulatory certainty and
transparency
-	Ensuring that toxic or criteria pollutants are not increased as
a result of Cap and Trade actions.

In order to avoid unnecessary controversy, ARB should clearly
state its criteria for ‘linkage’. TCG urges that to avoid the
possible perception of or the actual exporting of ‘harm’, his
standard should be the same as the criteria for Cap and Trade in
the AB32 statute. 

Offsets

We are very supportive of the use of quality offsets and believe
offsets should meet high standards for both voluntary and
compliance offsets.  TCG recommends the Voluntary Carbon Standard
(VCS) as a good template for judging and assessing offset
quality.

The Scoping Plan suggests a target of not more than 10% of
regulated emissions as being eligible for offsetting.  An
explanation of the rationale for this number, and some discussion
of geographic boundaries, standards of reporting and accounting
and other details, would be helpful to avoid controversy and
disagreement. TCG looks forward to more detailed analyses and
discussion on this issue.

Distribution of Allowances

TCG believes that most if not all of the allocations should be
auctioned so that revenues can be returned to actions supporting
emissions reductions and assisting those sectors and communities
facing the most difficult technical, market, or economic
circumstances. There are lessons to be learned from Europe’s
experience in this regard.

During the July 17th Scoping Plan workshop, many who commented had
recommendations for the use of these potential revenues.  TCG
suggests that some kind of prioritization criteria or other
weighting factors be developed.  In that way, decisions about
revenue allocations are less likely to be perceived as being
manipulated for other purposes.  The criteria could be re-assessed
at each 5 year Scoping Plan update. 

Renewable Portfolio Standard (RPS)

Presently the 33% goal for state-wide renewable power content is
not in statute.  As with the present constraints on implementing
the Pavley legislation, consideration should be given to how the
goals of AB32 will be met if the 33% RPS doesn’t become statute
when envisioned or at all, or for some other reason is not
achievable.  Additionally, some discussion of the challenges faced
by the utilities in accomplishing the 33% RPS, such as transmission
constraints, may serve to bring attention and assistance to the
issue.  

Fees

It would be helpful to see a more detailed explanation of why the
“Carbon Fees” proposal (beyond the nominal fees establishing a
revenue stream to cover administrative costs) was not recommended
at this time.  

Additionally, any AB32 fee program should be sensitive to the
impact of additional costs on the low-income and small business
community.

In 2006, the initiative Proposition 87 was placed on the ballot. 
This initiative would have charged a ‘severance fee’ on the
extraction of oil and gas in California.  Ironically, California
is the only oil and gas producing state not charging such a fee. 
While TCG has no position on whether or not such a fee should be
imposed, it is something we would recommend is included in the
economic analysis work presently underway.

Fee and Auction Revenues

TCG supports the categories of possible funding recipients, and
encourages a broader application of these funds – specifically to
include infrastructure investments where there is a clear and
quantifiable emissions reduction, public health or adaptation
benefit, or leverages additional progress in low-carbon energy
sources, such as through improved grids or transmission systems.

TCG suggests that great care should be taken when establishing the
mechanism or organization that collects and holds these fee or
auction revenues.  The State’s highway investment funds (and other
fund pools) are regularly tapped by the state during fiscally lean
times.  Because reliable funding streams are so important to
establishing and maintaining the trajectory toward a low-carbon
economy, the revenue pool should be carefully safeguarded from
such access.

Information and Communications Technology (ICT)

Utilization of information and communications technologies can
enable significant energy and resource efficiency improvements.
-	The role and application of ICT should be enhanced. ICT (See
TCG’s www.Smart2020.org) is increasingly important as a set of
enabling technologies. For example: smart meters, real-time energy
management and demand response tools, enabling grid to
transportation technologies, improving distribution and logistics,
improving automobile performance, transmission and generation, land
use and transportation modeling, intelligent transportation
systems, and many other applications.  
-	There are many California-based ICT companies, providing jobs
and local revenues.  

Public/Private Partnerships

As the State local or regional governments strive to address the
challenges of climate change, in addition to meeting the
infrastructure, development, transportation and utility needs of
their citizens while resources are often constrained, TCG
encourages the consideration of Public/Private Partnerships as a
potential means to achieve needed outcomes.  In the evaluation of
the State’s “Shadow” footprint, opportunities to utilize
public/private partnerships (or lack thereof) should be included.

Building Codes and Standards, Appliance and System Efficiency

The new “Green” Building Standards code for 2010 mentioned in the
Scoping Plan and adopted by the State’s Building Standards
Commission on July 17th, is a good beginning.  However,
advancements in building materials, energy systems, lighting,
plumbing, motors and pumps, HVAC systems, etc. often outpace their
governing codes.  Without codes and their implementing agencies
enabling and encouraging the utilization of viable new
technologies or materials, innovation and new business is stifled.
Therefore, TCG suggests that the Scoping Plan recommend:
-	More frequent updates of building and related codes 
-	The creation of a State website to educate builders, architects,
planners, local code and permit enforcement staff, and consumers
about the different standards: Title24, green building standard,
energy star, LEED levels, Build It Green, etc.
-	Creation of a State-sponsored (though not necessarily run) new
technologies “Clearing House” to accelerate adoption of new
products and practices.
-	Creation of a State-sponsored (though not necessarily run) local
government staff ‘continuing education program’ to disseminate and
accelerate green building practices.
Fuels/Low Carbon Fuel Standard
With regard to the utilization of biofuels, there are some lessons
learned from MTBE as a fuel additive.  Emphasizing just one
environmental performance criteria may result in overlooking other
negative impacts elsewhere.  Therefore, TCG strongly encourages the
utilization of a rigorous full cycle environmental impact
evaluation (materials compatibility, public safety, environmental
fate, etc).  

Land Use

Land use changes are possibly the most challenging aspect of
addressing climate change policy.  Changes in policy and practice
today will not have measurable impacts for many years, but
cumulatively those impacts will probably be the greatest.  

Additionally, cities and counties experience a set of perverse
fiscal incentives for growth and development that are seldom in
alignment with recognized needs for compact development, transit
oriented development, residential and commercial retrofits, etc. 
Moreover, the State may desire consistency and coordination, but
cities and counties value autonomy and fiercely guard their
independent land-use decision-making authority.  This will
inevitably lead to conflicts with the State’s climate policy
priorities.  Therefore, TCG suggests:
-	A systemic evaluation of fiscal and tax policies related to land
use to align incentives (or disincentives) with the State’s climate
policy priorities (land use subvention rates for Williamson Act
lands is one example) 
-	Policies that discourage or even reverse sprawl. This is of
paramount importance in protecting forests, promoting reductions
in Vehicle Miles Traveled (VMT), protecting agricultural resources
and watersheds.
-	Promoting urban forestry for its connection to reducing urban
heat islands, carbon sequestration, air quality improvements, and
other environmental and aesthetic values.
-	The use of public funds to purchase woodlands and forests, as
described in the Scoping Plan, is an idea worth exploring further.
 The idea to purchase or protect from development agricultural
lands, wetlands, grasslands and critical watershed areas should
also be considered.  But, the use of public monies for these
activities should be considered very carefully, with private funds
used to leverage public money to the greatest extent possible.
Further, undeveloped ‘sequestering’ landscapes are of varying
types, qualities and vulnerabilities to development.  A system of
prioritization or ranking would be useful for making the best use
of limited resources while protecting the most valuable lands.

Inevitably, changes in land use patterns that are responsive to
climate policy will be motivated by costs. California’s urban form
is the result of low cost fuel, and long-standing government
funding support for development of roads and highways.  Fuel and
energy costs will become higher and higher – whether or not AB32
is implemented.  It is the State’s opportunity (perhaps
obligation) to invest in urban forms and transportation systems
that are as efficient as possible in order to protect Californians
from ever higher energy costs and ensure our future prosperity.

Biomass Energy

It is unclear what forms of biomass energy the state is
considering.  Careful examination of this issue should be
conducted to ensure that any biomass energy utilized actually has
a positive impact on the environment over its full life cycle. 

Water

TCG supports further consideration of a state-wide assessment of a
public goods charge (PGC) on water deliveries.  However, funds
derived from this PGC should be used for more than strict water
efficiency measures.  Improvements in water infrastructure –
especially where those improvements make conveyance, provision,
use or treatment of water more energy and resource efficient would
serve the goals of AB32 as well as have water reliability
co-benefits.  

PGC money should also be used to encourage water stewardship
appropriate to local watershed conditions and regional delivery
systems.

A water-related area the ARB may wish to examine in more detail is
the energy generation and emissions reduction potential of
municipal waste water treatment systems.  Many of these municipal
systems are nearing the end of their projected lifespan, and when
upgraded or replaced, may be more appropriately configured for
emissions capture and energy generation. 

High Global Warming Potential (GWP) Gasses

Because emissions from these gasses are often associated with more
technologically or economically complex situations, TCG would
encourage the inclusion in the Scoping Plan of some specific
actions or plans aimed at reducing these high GWP gasses.  For
example: sponsoring sector-specific working groups with technical
experts to advance the most promising actionable items (for
example, a small retail refrigeration working group).  The outcome
of these working groups could be specific policy or program
recommendations which could inform the ongoing work of the ARB or
other agencies, associations and organizations.  

Local Governments and Regional Targets

The Scoping Plan should make more distinct which aspect of a local
government or regional target is for the local government’s own
jurisdictional emissions, and which relates to the community as a
whole.  

TCG supports setting regional targets although these regional
targets should not be binding as AB32’s targets are, nor should
they be used to create an additional layer of burdensome
administration or bureaucracy, conflicting or inconsistent
standards or duplicative compliance requirements.   

The Draft Scoping Plan places a great deal of emphasis on the role
of Local Governments. However, local governments may view these as
‘unfunded mandates’.  Unless there are resources identified in
equal measure to responsibilities, the ARB’s expectations for
local government engagement and leadership will not be satisfied. 


Local government spending is constrained by requirements for
‘nexus’ between funding source and expenditure.  As such,
activities related to climate change (and associated energy
efficiency or emissions reductions measures) are typically paid
for with general funds.  However, general fund resources fluctuate
with the economy, are typically over-subscribed by City program
needs and would often be insufficient to implement the more
complex community-wide programs envisioned by the Scoping Plan. 
Therefore, TCG encourages the ARB to include the use of local
community groups (NGOs, Communities of Faith, Business Groups,
Foundations, etc.) that can work collaboratively with local
governments to accomplish the goals of regional programs, without
the funding and activity constraints faced by local governments.

TCG also strongly encourages the future resources from fees,
allocation auctions or public goods charges be directed in
sufficient measure to local governments and/or their community
group partners to substantially assist their climate-related
activities internally as well as throughout their communities.

Transit and Transportation

TCG strongly supports the improvement of transit and
transportation systems in order to provide:
-	Alternatives to automobile and short-haul air travel so that the
state benefits from reduced freeway congestion, 
-	Reduced transportation-related hazardous and criteria
pollutants, 
-	Expansion of local or regional employment delivering
transportation alternatives.  
TCG recommends that a common unit of measure be adopted to
evaluate the effectiveness of any transit, transportation system,
goods movement improvement programs: reduction of VMT.  This can
also be used as a measure for success in changing land use
patterns over time.

The Draft Scoping Plan mentions the High Speed Rail initiative,
but there are other regional rail, light-rail, rapid bus, and
other transit programs that should be called out specifically and
elaborated in a more comprehensive Land Use section of the Scoping
Plan, or in a unique section on Transportation.  Furthermore, the
High Speed Rail initiative is not assured of success.  The Draft
Scoping Plan should propose alternate transportation-related
emissions reductions in the event that High Speed Rail is not
implemented as or when envisioned.

Recycling and Waste

TCG applauds the inclusion of waste, waste diversion and recycling
in the Draft Scoping Plan.  However, to be truly effective, more
assertive terms than ‘move toward’ could be applied to the issue
of eventually achieving Zero Waste (ZW).  One option may be to
require local governments to set their own timetables (not
exceeding some number of years) for reaching ZW and reporting on
their progress on regular intervals.

TCG would encourage very careful consideration of the inputs for
biodegradable and/or compostable plastics or related materials. 
As with many complex environmental and technological issues,
waste, recycling and solid waste management can present difficult
trade-offs.  Just one example is that some jurisdictions may wish
to encourage or require more biodegradable or compostable articles
(plates, cups, containers, etc.) to reduce inputs to landfills or
items presenting a problem as litter.  However, as some of these
articles are made from food-grade raw materials, their production
may add to increased price pressures for regional or even
world-wide food stocks (as has been seen in the food/fuel
pressures on grains used for ethanol production).  

Most local governments are too small to the influence manufactures
to change product designs to align with ZW objectives, or to
collaborate with them in consumer or product-based campaigns (e.g.
recycling, composting, product specifications or substitutions,
etc).  This is an area the state should provide support and
leadership.

Emissions Quantification Protocols

TCG strongly encourages the next revision of the Scoping Plan to
include a table or a list of all of the ongoing emissions
quantification protocols currently in development, under
consideration or on a list for future consideration.  These
protocols, such as those for urban forests, agricultural
practices, forest bio-energy resources, etc., are crucial for the
rigor, accountability, and transparency necessary for emissions
reductions across many sectors. 

Energy Efficiency – Industrial Audits

The proposed program for larger commercial and industrial facility
energy audits and recommendations of cost-effective measures is a
good idea.  It would be extremely beneficial if the state extended
the program for energy efficiency audits to municipalities, and in
particlar, the water sector which the recommendation does not
appear to include.  Many studies show that the greatest energy use
reductions for any water or waste water treatment plant are through
energy efficiency measures.  

Small and Medium Sized Businesses

This fall, TCG will be releasing a publication, “Guide for a Low
Carbon Economy”, directed at small and medium sized businesses,
which could provide the foundation of case studies, technical
information and outreach the State is seeking to order to support
this important segment of the California economy.  Further, TCG
could provide specialized outreach or other support to the ARB in
reaching this and other economic sectors of the State.

Economic Analyses

TCG eagerly awaits the forthcoming economic analyses discussed at
the July 17th Scoping Plan workshop.  We look forward to seeing
more detailed assessments of:
-	The value of ‘co-benefits’ and costs of ‘first costs of
compliance’ 
-	Impacts or benefits to disadvantaged communities
-	Estimates of cost-effectiveness of emissions reductions from Cap
and Trade systems vs. (or in addition to) Carbon Fees. 
-	An evaluation of the technology and behavior ‘forcing’
capacities of Cap and Trade vs. (or in addition to) Carbon Fees
-	Estimates of the benefits or costs resulting from the
re-distribution of funds through the auctioning of allowances and
subsequent distribution of those revenues. 


Thank you again for the opportunity to comment.  The Climate Group
appreciates the diligent efforts of the ARB staff and the
outstanding Draft Scoping Plan they have produced.  We look
forward to working with the Air Resources Board and our other
member organizations to provide comment and further input on the
Scoping Plan as the next versions are released.

Sincerely,


Margaret Bruce
Western Regional Director
The Climate Group 
650/305-3060
mbruce@theclimategroup.org