To Reduce Greenhouse Gas Emissions & Embrace Kyoto Accord, California Enacts AB 32

Linda Adams

Though it cannot establish its own foreign policy, California’s size and economic make it arguably the world’s most prominent sub-state entity. Befitting its status as the world’s seventh-largest economy, California joined many of its global peers when it adopted AB 32, which will compel California to reduce the carbon emissions that lead to global warming. VerdeXchange News was pleased to discuss AB 32’s unique regulatory/market approach with Linda Adams, secretary of the California Environmental Protection Agency.

Given the strict air quality laws that California already has, how significant is the passage and signing into law this fall of AB 32, which mandates a reduction in carbon emissions?

This landmark legislation is hugely important and will have global ramifications. As many people said when the bill was being considered, this is a global problem and needs a global solution. I think that is why the Governor fought very hard during the negotiations to ensure that a market-based approach would be included in the process for getting to the 2020 target.

As we all know, California is a “command and control” state. We are very good at regulations; the California Air Resources Board is known and respected around the world. And we feel we need both regulations and a market to make this work and to have an impact that could be global.

Elaborate on the market approach and mechanisms that AB 32 requires and promotes.

The bill requires the development of a market approach on the same timeline as the regulatory approach. To implement a market approach, we will need to set rules for a market so that when we begin trading with other states and, ideally, other nations, there will be clear rules so that we know that the reductions are verifiable and quantifiable. We can’t create a market, but we can set the rules for the market. That is one of the big jobs ahead of us.

How will CalEPA tackle implementation of AB 32? What entities and organizations will you involve in drafting the regulations?

As secretary of CalEPA I plan to bring together experts from around the world for what would be basically an advisory committee. I envision that we would put together some basic market rules and principles, which we would then put forward to the Air Resources Board. The Air Board is ultimately responsible for adopting both the market approach and the regulatory piece of the program. But the governor is asking me, as secretary of CalEPA, to move forward on the market piece.

What might be the benchmarks for compliance that the business community—which has to comply and reduce greenhouse gases emissions by 25 percent by the year 2020— should prepare to accept at the conclusion of rule-making?

The Air Board, by January 2011, will complete their rule-making and the market mechanism. A rule-making process will commence early in 2007, so it will be very important for the regulated community to be fully engaged in that rule-making before the Air Board. I also plan, as chair of the governor’s Climate Action Team, to vet some of these issues before the Climate Team.

AB 32 gave broad new authority to the Air Resources Board to regulate greenhouse gas emissions; however, there are many other state agencies that have a role to play: the PUC and the Energy Commission both deal with renewable energy, and the Integrated Waste Management Board may deal with the issue of methane gas from landfills. Current law gives mandates that I coordinate the efforts of all state agencies, so that coordination will be even more important.

Are there benchmarks for progress before 2011 that the civic, business, and labor communities should be aware of?

I formed the market advisory committee at the end of 2006. The official deadline begins by January 1, 2008, when the Air Board will adopt the regulations for the mandatory reporting. So the Air Board will begin its work immediately. Also, by that same date, January 1, 2008, the Air Board will adopt the 1990 emissions baseline. The 1990 baseline emissions that we must achieve by 2020 are very important.

How will the enforcement tools that the Air Board adopts, and that CalEPA advances, be administered at the state level?

In addition to significant authority to regulate greenhouse gas emissions, the Air Board was also given all of the enforcement tools available under state law. As to the details of that enforcement, it would probably require some discussion with the Air Board members themselves about how they apply these different authorities.

An op-ed in the New York Times last year addressed the signing significance of AB 32; its headline read, “Clean Air, Murky Precedent.” Its thesis was that while California took a significant action to reduce greenhouse gas emissions, maybe it was over-reaching in light of the fact that is was just one state of 50 in the United States, which is just one country in the world. It also warned that California’s failure would a bad setback for the movement to cut greenhouse gases globally. Do you have a reaction to this cautionary view?

AB 32 is very significant. We have a governor who is not only a famous governor, but also a famous actor, body builder, etc., known around the world, and that the rest of the world looks to people like him to lead the world. I think he was the right person at the right time to take this bold action. We do not see failure as an option. The word is not in our vocabulary. The fact that we have benchmarks and have some time to actually implement this will ensure our success. That is why the market piece is so important.

I also chair the California Climate Action Registry, where businesses have voluntarily registered their emissions. A good lineup of businesses belong to the Registry. Several months ago we hosted a meeting and invited other states to talk about forming a multi-state registry that would eventually lead to a regional or national market. People from 27 states came to the meeting. That shows that we have already started the process for potential trade with other states.

Of course we also have the agreement with the United Kingdom, where we are already sharing information regarding how their market has been working and any pitfalls to avoid. The U.K. is very interested in our approach, because I think our approach may be unique around the world in that we will be combining regulations with a market approach. U.K. is market-only and lacks regulations, so they are trying to learn from us.

At the signing ceremonies we had representatives from Japan, Canada, Germany, and the U.K. I have had conversations with officials from Australia who told me that states in Australia are going to shamelessly copy AB 32. That is wonderful news. So literally the whole world is watching and is excited that California and Governor Schwarzenegger have taken on this issue.

The last sentence of William Sweet’s op-ed in the New York Times reads, “No matter what happens, the end message will surely be that there is no real substitute for concerted, national action. Simply put, though California deserves praise for attacking the climate problem head on and maybe trying to do too much on its own.” Is former State Resource Secretary Terry Tamminen out on the stump attempting to create a national greenhouse gas mitigation program that builds on and complements AB 32?

My understanding is that Terry Tamminen is indeed talking to other states, perhaps urging them to adopt similar legislation.

Yes, if the federal government set the rules that would make things a lot easier for all of us. But, someone has to lead, and someone has to start the process.

Like we saw in our clean car regulations, ten other states have followed. Also, in the Northeast there is already a trading program for electricity, and that is one of the first places we would look for potential trading partners. So much has been accomplished among the states and the regions that there is no turning back. Ideally the federal government would step in, but I think a tremendous effort is already underway.