Comment Log Display

3 September 2021

The International Emissions Trading Association (IETA) welcomes
this opportunity to submit feedback to the California Air Resources
Board (CARB) on the 17 August 2021 workshop "2022 Scoping Plan
Update - Scenario Concepts Technical Workshop." 
As the leading international business voice on climate markets and
finance, IETA's non-profit organization represents over 180
companies, including many facing climate risks and opportunities
across California. IETA's market expertise is regularly called upon
to inform market-based policies that deliver measurable greenhouse
gas reductions and removals, address economic competitiveness
concerns and balance economic efficiencies with social equity and
co-benefits. Our mission is to support broad and functional carbon
markets, guided by the principles of efficient, low-cost,
measurable climate outcomes while ensuring environmental
integrity.

As stated in our 8 July 2021 letter, IETA recommends that CARB's
2022 Scoping Plan explicitly model a cap-and-trade scenario with
caps declining to net zero by 2045. This scenario, further outlined
in IETA's 2020 Paper "Achieving Carbon Neutrality in California",
would center cap-and-trade as the "workhorse" measure and strategy
for achieving most of the abatement required to achieve carbon
neutrality in California. If CARB does not consider cap-and-trade
to be this cornerstone measure, it relegates the state to choosing
from a suite of second-best, less efficient options. This would
unnecessarily increase California consumer costs and ultimately
lower the probability of measurably achieving carbon neutrality.
Continued reliance on alternative direct policies would also forego
opportunities that higher allowance prices afford, including more
revenue for the State to spend on addressing the climate challenge
while protecting its disadvantaged communities. For these reasons,
we were disappointed to see that CARB did not discuss any
cap-and-trade scenarios during its recent technical workshop.

In addition, the "Scenario Design Options" that CARB staff
presented for consideration in developing modeling scenarios did
not include cap-and-trade or other market-based solutions. Instead,
scenarios were limited to sectoral/engineering-based options and
other direct regulations. An economy-wide approach like
cap-and-trade achieves climate targets at least-cost - because they
do not rely on government intervention, the broad market approach
directs investment into sectors and technologies that can reduce
emissions most affordably. To that end, a cap-and-trade scenario
would illustrate the viable, least-cost option for California to
achieve its climate targets. Such an approach should serve as a
baseline or reference case, with any deviation from the least-cost
option requiring additional justification based on factors
unrelated to costs. Instead, the costs of the current scenarios
cannot be compared against the least-cost option, thereby forcing
stakeholders to subjectively pick their preferences for sectoral
reductions or engineered solutions. 

California should not be required to fight for carbon neutrality
with one hand tied behind its back. Nor should stakeholders be put
in a situation to compare scenarios without complete information on
relative costs. IETA therefore urges CARB to explicitly model an
aggressive cap-and-trade scenario in the development of
California's 2022 Scoping Plan. 
We look forward to close and frequent engagement with CARB staff
and other stakeholders over the coming months. Please direct
comments or questions to IETA's West Coast Representative, John
Blue (blue@ieta.org).