James Goldstene on CARB’s New Visioning Plan, First Carbon Credit Auction, and Air Quality

VerdeXchange: James, last month, the California Air Resources Board held the first carbon credit auction, with allowances selling for a few cents above the minimum price of ten dollars. How should that auction and its success be interpreted, and how are the Air Resource Board and the market reacting to the first auction? 

James Goldstene: Thanks for the question David. We’re very pleased with the success of the first auction: it went exactly as planned. We were able to make sure that everybody was able to get what they bid for, and the underlying system worked very well. We wanted to make sure that there were no issues or glitches there.

We had very robust participation. Going forward, we’re getting ready for the next auction—as you know we’re having an auction every quarter, and the next auction will be in February—and given the success of the first auction, I think that will provide even more confidence about the quality of the program as we move forward. 

VerdeXchange: As an officer of CARB, you are limited by law as to what you are able to comment upon regarding the carbon markets, but public records reveal that all 23 million 2013 allowances auctioned by CARB were sold, but only 14 percent of the 40 million 2015 credits were sold. Are you able to speak to what that says about the future market for these credits? 

James Goldstene: I can’t predict what the future is going to be, but I can say that the allowances that were not sold will be up for auction again. The program is designed so that every auction has current year vintages as well as vintages three years forward, so market participants can chose where they want to make their purchases. 

VerdeXchange: Let’s turn to an area that you able to speak to, and that’s what is happening among all the agencies in California—CARB, the CPUC, the California Energy Commission, and the ISO—to collaboratively respond to the renewable energy challenges facing California and its electrical infrastructure. There was a recent op-ed in The Sacramento Bee by the leadership of some of those agencies. Can you comment on the level of collaboration now taking place in California to deliver on the promise of renewables? 

James Goldstene: We are working more collaboratively than ever before to make sure that the grid is modernized and able to handle the new demands that are increasingly being placed on it. The ARB, the Energy Commission, the PUC, and the ISO, are looking toward the future to enhance the reliability of the grid and make sure that renewable energy projects are permitted in a timely way. The system has to support electrifying our vehicle fleet and our transportation fleet, which is really key to moving towards our 2050 long-term goals of reducing climate impact and meeting air quality standards. 

VerdeXchange: Returning  to the successful auction, what steps is the Air Resources Board taking to coordinate California’s carbon market with other subnational and national markets, for example with Quebec and Australia, to globalize carbon pricing? 

James Goldstene: Clearly, California is becoming the focus of, if not the model for, other states and provinces as we move forward. We were one of the founding states of the Western Climate Initiative, and we have worked with other regional programs like RGGI (the Regional Greenhouse Gas Initiative).  And, as you know, we’ve been working with the Province of Quebec to establish our first linkage agreement.

We’ve stayed in touch with  our colleagues in other states, and hopefully in this new political climate we can get them to reengage with us in a vigorous way.  We’ve also met with delegations from China, the EU and Australia to discuss program design and linking issues. 

VerdeXchange: And how does CARB respond to the push-back by some in industry and the Chamber of Commerce against the efforts by CARB to advance carbon markets in California?

James Goldstene: The Chamber and others who have been challenging our authority are parading the same old lines of opposition. We’re not surprised by it. The fact is that many of their members have been very active participants and have worked with us in a positive way in making sure the design of the program is the best in the world. 

VerdeXchange: With the reelection of President Obama and the cabinet again taking shape, what do you envision as the likely relationship between and among CARB, the US EPA, and DOE in 2013? 

James Goldstene: We’ve been  fortunate to have had such a great relationship with the Obama Administration in his first term, and we expect that will continue.  Of course there will be changes of personnel in his administration at the high levels, but I predict that we will have a continued very strong and positive working relationship with the Department of Energy, the US EPA, and the Department of Transportation. We’ll continue to foster and develop those relationships because there’s so much work that we can do together, and they do look to us as a model. We also have a good relationship with the State Department, which often looks to us to talk about climate issues internationally. 

VerdeXchange: Drill down on what those working relationships might produce in the way of policy in 2013? 

James Goldstene: Certainly on the air quality areas we have a lot of work to do still, particularly in California on air quality regulation. We are working very closely with US EPA to make sure we meet the Clean Air Act goals. I also think that with regard to international efforts, California is seen as a model in the climate area.  People are looking at our cap-and-trade program, and the offsets part of that program is something that others around the world want to copy. We’ll continue to work with the State Department in that area as well. 

VerdeXchange: James, now that climate change is back on both the President’s agenda and a renewed focus of media attention, what future CARB initiatives might the public and our readers expect?

James Goldstene: I think readers will want to know that we are updating our scoping plan. This update is required by AB32, and we’re supposed to do it at least every five years.  The first scoping plan was adopted by my board in 2008, and as you’ll recall, this was a plan that spelled out a comprehensive list of measures that included advanced clean cars, a low-carbon fuel standard, and cap-and-trade.  We intend to bring the updated scoping plan to my board for consideration at the end of 2013.

I think also, as you just pointed out in your question, the political landscape is changing, and I believe that it provides more opportunity for broader climate action around the country and hopefully at the national level.

Of course, we also have many air quality issues that we’re working on—it’s not all about climate. We have major responsibilities in the air quality world, which follows the vision document that we released last year about how we’re going to integrate air quality and climate policy to achieve both our greenhouse gas goals and our health quality goals.

VerdeXchange: Lastly, if we’re talking again with each other in December of 2013, what do you believe CARB’s successes will be? 

James Goldstene: We will have linked with Quebec, and we will have started the process with other states and provinces.  We will have a “Vision” document aligned very well with the new scoping plan that links air quality and greenhouse gas reduction efforts. And, of course, we will have had successful auctions throughout the year.••• 

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