EDF’S Lauren Faber On: California's AB 32, Cap-and-Trade, and New Goals for State’s Renewable Portfolio Standard


VerdeXchange News: Lauren, EDF’s website describes your mission as “building support for business and government leaders to advance key policies in the areas of climate, energy, oceans, land, water, environment.” Elaborate.

Lauren Faber: There’s a lot of relationship building that I think is key to my work and any work around these topics. All of these policy issues, environmental challenges and opportunities are interdisciplinary. These are issues that affect the environment, public health, and businesses in all sectors—small and large. It really does require a collection of stakeholders and interest groups to be able to move something forward, both from a policy and political-feasibility standpoint. 

VerdeXchange News: Let’s talk about EDF’s work on AB 32. Update our readers—what are EDF’s current priorities regarding policy and implementation?

Lauren Faber: We see the ongoing implementation of AB 32 as successful. Under the umbrella of AB 32, which requires a reduction of greenhouse gas emissions to 1990 levels by 2020, there are a number of policies and measures that come into play in order to reach that goal. One of the areas that we focus heavily on, and have a large amount of expertise in, is the development of California’s carbon market. 

California’s cap-and-trade program began in 2013, so it just celebrated its first birthday. We’ve been following the market very closely from a policy-implementation standpoint, but also from a market-functioning standpoint. We are also seeing that it has been a huge early success in providing the foundation that we expected—and needed. That was actually one of the subjects that I really enjoyed talking about at the VerdeXchange Conference a few months ago.

Another area of work that we focus on a lot under AB 32 is clean transportation fuels. In California, the greatest contribution to greenhouse gas emissions comes from the transportation sector. We are a large state, and we are on the road a lot. So there is a clear imperative to move to cleaner forms of transportation—to move away from liquid petroleum fuels, which right now make up around 93 percent of the total transportation fuel mix in California. 

There are a number of policies in place that help with that—one being the Low Carbon Fuel Standard, and another being the fact that transportation fuels are coming under the cap in the cap-and-trade program at the beginning of 2015. There is also an important package of policies that will incentivize the electrification of vehicles in California. 

VerdeXchange News: With transportation coming under the cap next year, what are the sub issues that arise? What are EDF’s expectations on carbon prices and California’s Low Carbon Fuel Standard?

Lauren Faber: By bringing transportation fuels under the cap, the cap actually expands by more than double. We see that there are significant opportunities for reduction by having more players in the market. We expect that any impact on the carbon price will be marginal in terms of any effect on gasoline prices that California drivers already see month-to-month. Incentivizing alternative low-carbon fuels with the LCFS and a transition away from gas and diesel is actually expected to reduce the cost of fuels over time. 

The other important thing for folks to consider when transportation fuels come under the cap and after the cap expands is that the proceeds from the cap-and-trade auction will also significantly increase compared to the amount we see in 2013 and 2014. The state is fortunate to have the opportunity to be actively discussing how to use funds to invest back into California to reduce greenhouse gas emissions and improve public health.

VerdeXchange News: This month, Evan Halper in the LA Times noted that conservative heavyweights have the solar industry in their sights, specifically in California where like interests unsuccessfully funded an anti-cap-and-trade ballot initiative. How does EDF, which has traditionally been a policy rather than a political player, take count of what’s going on in the political environment to affect outcomes in terms of climate change and AB 32?

Lauren Faber: We are very conscious of the work that may be happening behind the scenes to cast doubt on the program. We do a lot of work to educate legislators, to work in their districts to educate their constituents. We want to ensure that the legislators understand the benefits that are accruing from the program to their districts. In fact, we just launched a Green Roads map that actually maps out all the clean transportation businesses in the state so that legislators can look at what kinds of new businesses are popping up in their districts thanks to the economic incentives that are created out of this program. 

That kind of work is very important to us, going back again to developing relationships with the businesses that are flourishing because of AB 32.

VerdeXchange News: Some commentators suggest that California’s cap-and-trade has evolved into mostly being about money—who gets it and how it’s divided—and, as a result, not about incentivizing responsible behaviors to reduce greenhouse gas emissions. Is that a false view, or is there some truth to it?

Lauren Faber: I think it is certainly fair to observe that there is a lot of attention being paid to how we invest the proceeds. But I think that is very responsible of the legislature. This is new money coming to the state, and it is a sizeable enough chunk to notice. It is the responsibility of the legislature and of the agencies working on climate change to really think about how best to invest the funds, in a way that has as many benefits as possible in the realm of reducing greenhouse gas emissions and protecting disadvantage communities. Attention must be paid to the public health benefits, as well as economic benefits—investing in the sectors that we really need to build up to reach our greenhouse gas reduction goals—and go further.

We’re very confident that, money talk aside, AB 32 is going to meet its 2020 target. The most important piece of this is the combination of putting a price on carbon and having a hard cap on emissions. The proceeds actually allow us to go further and do some targeting as we transition away from fossil fuels, and we need to do it as fast as possible.

VerdeXchange News: Would a carbon tax, such as British Columbia’s, have been better for the environment than cap-and-trade?

Lauren Faber: It’s extremely important and a key part of the program to put a price on carbon. The cornerstone is also a mandatory cap on emissions so that there is a clear signal that the state, and really by extension, the world, can only handle a certain amount of emissions going forward. Emissions must decline significantly over time. This is a reassurance that we’re actually meeting those goals.

VerdeXchange News: EDF has long advocated for California’s energy grid to rely more on renewables. Utilities often cite the unintended consequences around grid reliability arising from integrating intermittent sources of energy. Jonathan Weisgall at MidAmerican Renewables, in a companion interview, addresses the need for a regional real-time market service—referred to as an “energy imbalance market” or EIM—to optimize management of the transmission system to balance supply and demand across a larger footprint. Can you speak to the value of EIMs for California and the West?

Lauren Faber: While we work closely with the California ISO, I can’t speak to the particular report nor am I an expert in the energy imbalance market. I can say, however, how important it is to match up the incentives and the regulation that the utilities face, as set by the PUC, and the way the CAISO needs to see resources in their energy market. Syncing that is extremely important. It’s very encouraging because the PUC and the CAISO are working together and are very conscious of that.

We are looking at how to address things like peak load, and to take full advantage of our preferred resources. Peak hours are changing, and we are perhaps generating our cleanest power at times when we don’t actually see peak usage. How do we transition usage or how do we increase our capacity for storage so that we are using as much of the clean power that the state generates as possible? That’s an area of extreme importance to us, one which we think allows for a lot of other service providers to better participate in the market—not just focusing on energy efficiency, but also demand response and storage capabilities—before we start looking to new generation.

VerdeXchange News: Back to California’s cap-and-trade program. Senate President Pro-Tem Darrell Steinberg, acquiescing to Governor Brown’s proposal to use cap-and-trade money to fund the bullet train, seems to have cut his own cap-and-trade deal, using the latter to fund his priority—urban smart growth and mass transit. What are examples of future uses of cap-and-trade dollars? Is EDF comfortable with relying on like quid-pro-quo budgetary arrangements to effectively advance the goals of AB 32?

Lauren Faber: I think how things will actually play out in the investment plan still remains to be seen.  There is a question mark around whether we will be looking at investments on a year-by-year basis, as part of a multi-year investment plan, or whether some appropriations will be made for the perpetuity of the program. I believe that’s some of what Senator Steinberg was actually looking at—can we have more long-term certainty in investments for certain types of infrastructural needs, whether that is high speed rail or some of the 375 smart-growth opportunities? It certainly is important to work across the suite of sectors that are greenhouse gas producing, from electricity, water, agriculture, and transportation. 

One of the important things that is being discussed right now that we’re very excited about is this question of what happens after 2020. We need to ensure that there’s a very clear signal to the private sector about emission reduction requirements beyond 2020, as in looking at 2030 targets and beyond.

VerdeXchange News: California’s Renewables Portfolio Standard (RPS), as you well know, is one of the most ambitious renewable energy standards in the country. The RPS program requires investor-owned utilities, electric service providers, and community choice aggregators to increase procurement from eligible renewable energy resources to 33 percent of total procurement by 2020.There’s been talk recently of extending the goal to 50 percent by 2030. Is that EDF’s position?

Lauren Faber: I don’t think that at this point we have a position on a new level for RPS. There was a bill passed last year clarifying that the 33 percent was a floor and not a ceiling in the RPS, which was definitely a good signal. We don’t have a position right now as to what the number should be looking beyond 2020, but we certainly think that the state has the capacity to go beyond 33 percent.

VerdeXchange News: Let’s close with a question about how EDF allocates its scarce resources and picks the policy it should work on. You’re involved in transportation—are you also focused on how you raise money from transit taxes, or alternatives to those metrics, or are you thinking about congestion pricing? What issues do you decide are within EDF’s focus, and what issues are not?

Lauren Faber: EDF tends to focus on how we align policy in a way that changes economic incentives to do good things for the environment. When it comes to something like transportation, it is not in our core portfolio to focus on a particular technology. It doesn’t mean we don’t ever do it, but generally we don’t specifically focus on electric vehicles themselves, or solar power itself, or wind power itself. We’re very interested in seeing performance standards set and in seeing markets better incentivize low-carbon sources of energy. That’s why something like the Low Carbon Fuel Standard or the cap-and-trade program is a really good example of our work to shape markets to allow for cleaner energy sources to not only compete but outcompete conventional counterparts. That, I think, is our strong suit.