Transcript: How to Improve California’s Cap and Trade Program (CA Climate Policy Summit 2024)

Please note that the transcript provided below is AI-generated and intended for reference. It may contain missing words, misspellings, or other small errors. To request a correction or clarification, please contact

Jerilyn Lopez Mendoza (01:05:21):
Yes. So I’m just do a quick introduction. Good afternoon everyone, and thank you for being here. My name is Jerilyn Lopez Mendoza. I’m the Los Angeles regional organizer for The Climate Center. I wanted to say welcome if you haven’t figured it out or visited yet. The men’s room and ladies room is out the door and to your right and there’s signs and you’ll see all that. We’re going to be going from now until three 40. Then we’ll have a 25 minute break and then there’ll be the last session of the day and then we’ll have a reception. So I would like to take this opportunity to introduce our moderator for today, Michael Wera, also known as Dr. Wera, also known as Mike. And he will be moderating our panel today on Captain Trade.

Michael Wara (01:06:13):
Thank you Jerilyn.

Hey everyone. We’ve got a really great panel today to talk about the future of cap and trade, and I think it’s a really important moment to be doing that. First we’re going to hear from Jasmine Ansar, who is the senior climate researcher at the Climate Center. Then we’ll hear from Amee Val, who is the longtime policy and research director at apen Asian Pacific Environmental Network. And then we’ll hear from Vanessa Carter Faoc. Thank you Vanessa. Program manager at uscs Equity Research Institute, which has done really important EJ focused research over the years on the impacts of cap andrade. And I’m going to take just moderator’s prerogative and just talk for a couple minutes to share a perspective about why this conversation is important. Now, some of us, maybe people in this room still have scars somewhere inside them in their hearts. From the last reauthorization process for cap andrade that occurred in 2017, AB 3 98 conjoined with six 17. That allowed us to have a cap and trade program to the end of 2030. That bill passed by a two thirds majority barely. And in order to get there, it involved a number of really painful compromises, particularly for the EJ community with respect to regulation of refineries.

But I’d say that the thing to recognize, or the thing that keeps me up at night, and I think a lot about with respect to the next, the coming round of CAPA trade reauthorization, is that we’re in a really different place when we negotiated, and I should say I worked closely with the TEMS office on this legislation when we negotiated on 3 98. The price in the cap and trade market was at the price floor. Auctions were failing to sell out and the concerns that were motivating, many people were really focused around how do we restore the health and viability of the program? How do we make sure that the GGRF money is coming in we want, so we can either prior appropriate it or spend it in some way. How do we make sure that we’re creating a program that’s robust enough to manage the path to 2030.

And today we’re in a very different place. Over the last 18 months, or really two years, the price of allowances in the cap and trade lifted off the price floor. The last auction in Q1 24 closed at $42 a ton. That’s among the highest carbon prices in the world. And we’re on a trajectory upwards. The modeling that’s recently been done by the uc energy modeling team out of Haas and uc, Davis, indicates that that price trajectory is going to continue pretty much no matter what changes we make to the program. As long as we extend the program, we’re looking at a period of higher prices with bigger impacts on industry and consumers. So we need to be thinking about where the proverbial puck is going to be, not where it has been. Not looking backwards necessarily, but looking forward to plan for the future. A future hopefully that involves deep cuts and emissions, involves investments that we really need to make to enable those deep cuts. And also thinks about how we manage and afford and manage the political consequences of a program that’s going to look very different to tomorrow, even from how it looks today. So I’m going to invite Jasmine up to give our first talk.

Jasmin Ansar (01:10:19):
Good afternoon everyone.

So I’m going to, in many ways just begin by setting the stage about cap and trade toku very, very quickly about what it is and how it works. And I think, as Michael says, we’re kind of at a pivotal point at the moment, we’re at a point where we’re asking where does it go next? And I also, the California Air Resources Board who manages the program, they’re at a point where they’re thinking about introducing some changes to the program for the next compliance period. So the question is what changes, if any, should they institute? Let see if I can work this out. Yeah. So as I said, I’m just very briefly going to talk and I think one of the questions I want to address is just what have we learned? So I do believe to some extent in looking back and reviewing, looking at what we have accomplished and as Michael says, looking at what’s left to do and how do we move forward very, very quickly, just a brief description.

Of course, cap and trade is a market-based system, and what it does is it aims to reduce climate pollution by establishing annual limits, which are declining every year. And basically the entities involved, they reduce emissions either by changing, transforming their technology to low carbon or they can buy allowances in quarterly auctions. And again, just to give you some context, and you can see I actually took these slide from the California Resources Board, so this just gives you context for the targets where we’re headed. We actually reached the 2020 level six years early. That was reaching 1990 levels, and the next goal is the 2030 target. And that’s going to be a very tricky target to reach. And as was said this morning at the next 10 report, the recent report, they suggested that we need to ramp up quite significantly because we aren’t going to make it at our current rate.

Again, just to highlight, this is another slide I took from the California resources and this just highlights some of the successes. It’s a snapshot in time. We can see that greenhouse gases have been reduced and there have been benefits in the sense that revenues have been earned as a result of the auctions. The overall goals, of course, of the program was to reduce greenhouse gases, climate pollution at the lowest cost to put a price on carbon pollution, to encourage innovation, to encourage clean energy investments and pay to some extent for them and to achieve emission reductions and to establish California as a global leader. I think if we look at the record so far, well there’ve been a few successes. We’ve had some successes, but probably the report card would be more like a maybe C minus. I don’t know. Emissions have been reduced, but as I said, all the evidence is that we need to ramp up very, very significantly.

There is a price on carbon, however, it clearly does not reflect the actual damage costs from pollution. The price recently has gone up, but for first eight years or so, the price basically just stayed at the floor. So that was problematic because it’s meant to be steadily rising to indicate that the increase in the damage costs. I would say maybe the successes. I do think California is recognized as a leader probably in climate policy, and we can see this because other jurisdictions want to join the program. We’re in discussions now or will be soon with Washington State. So before I go and talk about what sorts of changes might occur, let me just ask the question. Well, why have a market-based program at all? What’s the significance? Why do we need one? I think the reasons I would give would be, firstly, I think charging polluters a price for carbon pollution gives polluters incentives to reduce emissions.

I don’t know about you, but I always learned in kindergarten, if you make a mess, you have to clean it up. So if you make a mess, if you could pollute, you basically need to either clean it up, which I reduce the pollution or pay for the cleanup, which is another way of saying we need a carbon price. I think another important reason is that we can raise significant revenues from the sale of something like a cap and trade program. And that can be used in many different ways. I mean, perhaps one of the most important is in fact the issue that Michael raised, which is that as the price goes up, the price itself is very regressive. It is disproportionately burdensome for low income and disadvantaged communities. So the one question or one possibility is to actually use those revenues from the auctions and to direct them to address those regressive elements and to help lower income communities.

We do this to some extent at the moment through the Climate Investment Fund, and I know there are suggestions and proposals to have something like a climate dividend program, which would basically take the funds and distribute them equally to all, but perhaps a better use might be to actually target the people who are most affected and least able to afford the price increases. And I think the other important issue, and Vanessa is going to really tell us a lot about this, and that is to use the funds to actually, the climate investment funds have been used. They have been used to some extent to address the pollution burden of the disadvantaged communities, but also to stimulate investments in low carbon technologies. So going on to the reforms for the program, and I’m going to sort of just really talk about three reforms, although I think probably the most important, and it’s actually a point that isn’t on the slide, is we clearly need to increase the stringency because the program is not delivering enough or it is not on track to deliver enough of the emissions reductions that are necessary in terms of reforms. I’m going to talk very briefly about how I think the supply of allowances or permits in the program needs to respond to more to the climate price. I would argue we need to close loopholes to make polluters pay the real and actual damage costs and we need to stop subsidizing pollution.

So let me just quickly go through the three and the ways of addressing them to adjust the number of allowances when prices are low, which they have been. As I said, for a large part of the program, I think one of the problems is there was legislation introduced, and we do have basically price triggers. So when prices get very high at certain points, more allowances or permits are allowed into the market so that then when prices are high, then they allowing more allowances. And that of course moderates the price. And we actually have two of those price triggers. And in fact, at the very extreme of prices get extremely high and become some might argue politically infeasible, then the supply of allowances is in effect unlimited. But what we don’t have is anything to address the case when you have a surplus of allowances and there are too many. So what we need is, and I think the technical term is an emission containment reserve. And what that does is that automatically adjusts the number of allowances so that we can be sure that there are not too many floating around and people are actually paying for the carbon pollution.

I think the next important change that’s required is to phase out what’s called the offset provision. This is the provision whereby a certain small percentage of allowances can be met by basically buying offsets. These are emissions reductions done by others. The main problem with them is all the subsequent analysis has demonstrated that actually these offsets are both unreliable and lack integrity. So they are not necessarily real and we really cannot, they should be phased out. We can’t afford to waste both time and effort on policies that did not deliver emission reductions. And perhaps more importantly, what this offset provision has allowed is continued pollution in areas typically, which have large amounts of environmental, which are environmental injustice and disadvantaged communities. So that’s clearly a problem. And finally, we need to stop subsidizing pollution. And by subsidizing what we notice is many allowances are given away for free, just about 50% of them.

So really the question is why are we subsidizing? Why are we offering funding to people to continue business as usual? That makes absolutely no sense. And a much better option would be to offer transitional funding conditional on people meeting a stated implementation plan for decarbonization. And I know that’s the way that Europe is going. So let me just end by saying that I think an effective cap and trade program can be a powerful instrument to achieve cost-effective carbon reductions. We urgently need to fix California’s program. The pollution policies must not be override air and other pollution concerns. And finally, we really need to increase our ambition. This is a climate emergency. Thank you.

Amee Raval

Good afternoon everyone. How are you doing great. Okay, great. I know it’s late in the afternoon and we’ve been, it’s, we’ve had a lot of rich information shared, so always want to do a temperature check in the room to make sure engaged. I’m not going to have slides. Hopefully my presence and voice is engaging enough and I’m going to keep it fairly short. I do want to make time. There was a richness of expertise in the room hoping that we can have a more interactive discussion and back and forth to hear your questions. So my name is Ami Raul. I am policy and research director with the Asian Pacific Environmental Network. I’m actually at APEN for only two more weeks. I’m leaving after eight years of advocacy. So yeah, lots of reflections. But I will say this topic especially is one that’s a, it’s just one that I’m personally very invested in, partly because I started in the climate advocacy space in 20 17, 20 16, but cap and trade being extended was one of my first fights I was immersed in and it was riveting and dramatic and I think when it’s revisited, it’s being discussed now in the legislature and likely will be renegotiated in the coming year or two.

I think there’s just a lot to dig into and hopefully get right this time around that perhaps in terms of our movement, just learning about some of the misalignments and gaps that we can hopefully learn to redress this time around. APEN, you probably have seen us around the conference, but for folks that don’t know, we are a grassroots environmental justice organization. We specifically organize frontline EJ communities, Asian immigrant refugee communities specifically across California. The history of our work and fighting over the past two decades is really rooted in Richmond, California, which is home of the Chevron oil refinery. We’ve also expanded our organizing into Oakland Chinatown as well as Wilmington in la. And so the heart of our work is really advocating for communities that are living in the shadows of the state’s most polluting oil refineries. And I think it’s very important and appreciating the climate center for inviting us to this dialogue and conversation because the views of refinery communities in this policy dialogue is very critical and important, and I’ll share more about that, but refineries are one of the covered sectors under cap and trade and one of the worst actors under the program in terms of reducing emissions.

More specifically under the cap and trade program. Some sectors including oil refineries, are actually seeing increased emissions under the program that includes greenhouse gases as well as particulate PM 2.5, and that’s from OE a’s own sort of data reporting. So the state is revealing that fact to us and that sort of legitimizes the experiences of the folks we work with who aren’t seeing meaningful reductions in pollution, aren’t seeing meaningful improvements in health benefits in their families lives. And in fact, oil refineries are actually now the largest stationary source of greenhouse gas emissions in California. And I do want to step out for a second from California and just name that we see connections between the struggles of the communities we work with and in solidarity with communities that are fighting against injustice across the world. So for communities of color who live alongside big polluters that use our air, water, and land as a dumping ground essentially for toxic pollution, the parallels between systemic environmental racism in the United States and environmental apartheid against Palestinians are undeniable.

And so the same oil company, Chevron that’s fueling cancer and asthma for residents living next to the Chevron Richmond Refinery is also making billions running major gas operations off the coast of occupied Palestine. These massive gas fields provide the majority of light and energy for the ongoing genocide and Gaza. And so I just want to name that because that is our kind of orientation to international solidarity, to the ways we show up and really uplift our community struggles locally alongside the fights across the world. Coming back to California, as Jasmine mentioned, our state is severely off track to cut emissions by 40% as needed below 1990 levels. And based on the most recent data, as she noted, we would have to triple our rate of emissions reductions immediately to actually maintain the pace needed to comply with the law. Our take is that the state is failing to effectively regulate industrial pollution in our neighborhoods, letting big polluters like Chevron off the hook through cap and trade gimmicks like allowance, banking and offsets.

But rather than highlighting the gap and really helping legislators and the public understand the urgent need to make additional action CARB and the state is merely assuming that the gap will be filled through the cap and trade program without really explaining how and assessing whether the program is up to task or how it must adapt to play that role. So in terms of recommendations that come from the EJ community, we really want to reframe the conversation that the state first and foremost must prioritize direct emissions reductions measures in its planning and policy priorities. And although the scoping plan might assert differently, cap and trade is not a direct emission reduction measure. It’s a market-based mechanism as defined and authorized by statute and the unpredictability of the carbon market and the need for accelerated emissions reductions to meet our targets really means that we just need to reevaluate the role of this program in our state’s overall suite of climate policies.

And so in terms of alternatives to consider, we really think that instead of focusing so heavily on fixing the program, which I don’t think shouldn’t be done, we do need to also simultaneously put our state on a path to fully phasing out fossil fuels. And that means ensuring the decline of oil and gas, which is already in motion. And we’re seeing transition in places like Richmond is managed, is coordinated, is planned, and there are processes complimentary to this program that are grappling with these important questions that ultimately we need state levels as well as locally and regionally. There are major implications. And so we need clear timelines and goals in that regard because the state, let alone as advocates working in these communities, I think the state has yet many big questions to answer as it relates to what that transition looks like and assess whether it will be equitable and also making sure the right stakeholders are at the table.

And I’ll also just name that we in this conversation as part of cap and trade renegotiation, want to really talk about the broader suite of policies, that sort of cap and trade compliments. So as part of meeting our missions reductions targets, that means looking at the low carbon fuel standard, which I know there’s a panel on next session, but that is a complimentary market-based mechanism that CARB has put on pause in terms of reforming and making decisions on, but also has major implications in terms of meeting our targets, the types of fuels we’re investing in and subsidizing. And again, whether we’re going to meet our targets. It also to what Michael uplifted last round in 2017 when cap and trade was renegotiated and extended carb as well as our local air districts lost the authority to actually regulate greenhouse gases. Cap and trade is the only mechanism, policy mechanism that refineries are accountable to in terms of emissions reduction.

So that’s something we do really want to reevaluate as part of creating the opportunity rolling that back because that was a deal essentially made with industry at the table, but it sort of allows our local air districts and carbs to go further than what cap and trade is able to do. And that could pave the path for refinery caps, for example, facility level caps that address pollution at the source. And the last program complimentary that I’ll name and we have experts who work on this program is AB six 17, which was also something that emerged out of the 2017 cap and trade extension. And I think many folks in the room can name why that program is broken and needs fixing as well. I don’t think there’s potential there and the monitoring that’s been done is sort of, I wouldn’t say is something to invisibilize, but we do need enforceability attached to that program and again, reform to again be part of the suite of programs that are actually getting to direct emissions reduction. So that’s just some seeds of what I’ll offer. And yeah, appreciate making the space.

Vanessa Carter Fahnestock (01:32:30):
Hello all. Okay, great. Wonderful to be with you and see your beautiful faces. I’m Vanessa Carter Fahnestock and I am with the USC Equity Research Institute where we focus on data and analysis to power, social change. We work a lot with grassroots power builders in particular to try to support campaigns where we’re asked in to be supportive. We are based in Los Angeles, but we have some staff who are kind of scattered around the country as well. So I’m here to speak to you today about the California Climate Investment Suite that we have in California because of our cap and trade dollars. Over the last 10 years, about 10 billion have been implemented so far. There’s another 10 roughly billion that are allocated and yet to be actually implemented. And given that it was the 10 year anniversary, it seems like a great time to figure out how it’s been going.

So we took an equity lens to our analysis and tried to understand what’s actually been coming out of the ccis, but really the deeper motivation was around the fact that Justice 40 has landed on our landscape and that there are folks coming from outside of California asking us how we’ve done such a great equity program. And we said, well, let’s find out if we actually have before we assume that please. So we’ve already talked about how cap and trade creates the greenhouse gas reduction fund. Those dollars are then appropriated by the legislature into, I believe the count now is 75 programs and over 20 administering agencies. Very decentralized, lots of money, lots of people doing their thing. It’s a huge program. I get the fun task of trying to distill 250 pages of research into under 10 minutes. Wish me luck. Okay, so how did we do this?

The good researchers we are, we did a lit review and then we looked at the database from carb. God bless the researchers at carb, they really do the best job they can, but this dataset is really quite challenging. We worked with them a lot on trying to figure out what it was actually saying and you’ll see some of the results of that. And we spoke to over a hundred interviewees and informants, including AMI and including Phoebe, who I think is also in the room or was in the room. There’s the hand to try to understand stand, what are the equity points of views, how did this land in communities and impact communities? As well as trying to get a handle on some of the case studies, sorry, on some of the programs. We did case studies on 10 of the different programs. Again, that’s not 75 programs, but we tried to be representative in trying to understand what’s happening overall.

So I’m going to give you a big top line findings across a few different slides here. And the first one is simply that equity requirements matter. So SB 5 35 and AB 1550 really structured a lot of the California Climate Investment Program and required that 35% of the dollars go to what are called priority populations, which is a mixture of low income households, low communities, low income communities, and disadvantaged communities. Of course, disadvantaged communities are not, it’s a misnomer. They tend to be kept out, held out and quite resilient. So take that word disadvantaged with a grain of salt. But what the graph on the right is showing us is that in fact a lot of these dollars are going to priority populations. What we did was take the Callen virus screens measurement of communities and match that into the dollars from the CCI. And you can see as your eye moves down the graph, those are the most disadvantaged communities that are receiving the most dollars.

So equity requirements really do matter. And we’re also able to know just because these dollars, we can more or less figure out which census tracks they’re landing in. Again, more or less, we are able to tell that these dollars do tend to land mostly in black and brown communities, which is particularly important since environmental justice is most correlated to race more so than income or class. So this is really important. So these sorts of investments really need geographic information in order to understand where they’re going. So then the next finding is around what are they actually doing in terms of reducing GHG and co pollutants? I’m sorry about the color scale. It’s quite hard to see this, but the second, third, and fifth bar show diesel particulate reductions, nitrous oxide and reactive organic gases or volatile organic compounds. And it shows that there are disproportionate reductions of those in disadvantaged communities.

So we’re doing pretty well in those. The first bar is carbon reductions and the fourth bar is fine. Particulate matter PM 2.5. And we’re seeing reductions in communities as well, but they’re pretty evenly distributed based on disadvantage. So you might be wondering how much of an impact are these GHG reductions? So this kind of complicated graph shows the blue line on the top is annual emission reductions in California on a hole. So it’s a version of what Jasmine showed earlier. And you can see we’re seeing reductions from 2015 to the current period, 2020 being an exception of course, and it might be hard to see in the back, but that first dot on 2015 is 426.9 million tons of carbon. The orange line on the bottom is the reductions that are attributable to CCI investments. The 2015 is 6.9 million tons. Huge difference. That really ugly red squiggle is because I had to break the graph because there were so far apart.

So the punchline to this is we’re not going to invest our way out of a climate crisis anytime soon. What else are we finding? We did find that the projects are funding what folks want. Transportation, solar water infrastructure, air quality for the most part, CCI are delivering on what communities want to see in their communities. However, there are some very notable exceptions we heard in our interviews including dairy, biogas, alternative fuels like hydrogen, et cetera. So there are some very specific programs, some of which have been discontinued, others that need to be discontinued or significantly revamped in order to actually have important equity impacts. The tricky thing is sometimes these dollars are noted as benefiting disadvantaged communities when they actually aren’t because the communities are saying that they’re not, which is often the case with Dairy Digest or dairy biogas for example. So when we went into communities and did our three focus groups, what we learned was we went with this unwieldy database and we’re like, Hey, you’re getting these many millions of dollars in these different programs and folks we’ve worked with before were like, oh, didn’t really know about that.

And that was kind of consistent across the focus groups that we did. So CCI really has a bit of a PR problem. It’s not connecting with folks who could use these dollars, but where there was a felt impact. Those are really well coordinated projects that were community driven, like transformative climate communities, affordable housing and sustainable communities, those types of investments. Nonetheless, I’m sure a lot of this, these sort of public dollars are really burdensome on community-based organizations. Even the community-based organizations that have multiple capacities and large staffs and pretty significant budgets are struggling with these dollars because they’re exhausted, they have low capacity or there’s so many different funding streams on different timelines. Which ones do you choose from or simple? Well, they’re not simple, but administrative challenges. How do you actually receive the dollar into bank accounts and get it out? Not all community-based organizations actually have these capacities. So there’s significant barriers in that way. We also learned that tribal communities really require their own offerings and assistance. There are many issues here, but one of them is around sovereignty. At one point they were asked to sign sovereignty waivers in order to receive the dollars. I won’t say anything else.

So there’s that. And then we continuously heard that disadvantaged, unincorporated communities, while they are actually receiving a proportionate number of the dollars compared to their population and geography, they continue to be left behind because of the original sins of racism that left them out of municipal structures. So they’re way behind on infrastructure. And then these dollars, although they come in a proportionate amount, it just can’t remediate all of the past. Another finding data. Going back to data, my favorite topic, the data set that we had, like I said, it was a little messy, pretty hard to understand. We couldn’t find out who was the end receiver of these dollars. Was it households or corporations? It was quite unclear. We couldn’t understand the demographics of the final users. We couldn’t understand things like job quality. So we just need more robust data systems for CCI. And that’s certainly a fine balance because that means asking for more data potentially from community-based organizations that are already struggling to implement these dollars. And we need data to show to have accountability basically as well.

So I’m going to end on this slide. The ecosystem for Climate Justice has been central to making the CCIS equitable. So on the right is what we call the power flower and at the center our organizing and base building organizations that build power like a pin and around it are a whole bunch of different pedals, including researchers like myself. Any researchers in the room hands, couple, anyone building alliances or coalitions? A few. Great. Anyone doing communications hands? Couple. Okay, great. So we’re all in it together and we have to center base building and organizing because it’s where the power really comes from. And this ecosystem for climate justice has been critical to CCI because one, it helps to structure the policy in a way that can result in any equity benefits. Two, it’s this ecosystem that is fighting for the best programs like TCC, like others to stay funded because so much of this is not continuously appropriated three, they’re actually doing the work of investing these dollars in ways that connect with community need and community vision in a community engaged way.

They’re central and they’re central not just to connecting the dots of what we’re doing here in California, but to connecting these dots across the globe. And as you’ve probably heard, we heard this from AMI just a moment ago and you’ve probably heard in your other sessions, it’s also this ecosystem that’s really lifting up what’s happening in Palestine as well. That’s lifting up that the apartheid over there has an environmental aspect to it that’s lifting up that the ammunitions are not only toxic to people, but the land that they’re falling into. They’re lifting up the corporations that have skin in this game as well. So this ecosystem built in organizing, built around organizing helps us to stay fresh and to see the way that oppression and equity is constantly changing so that we can do this work in the way it really deeply needs to be done here in California in Palestine as well. And I will leave it at that. There’s the 40 page version of the 250 page report and stay tuned for our work on Lithium and the Salton Sea and Equity. Thank you.

Michael Wara (01:46:51):
I was in a panel just now and oh yeah, I could do that. Good idea. I want to give lots of time and room for the engagement with the audience, but I was in a panel just now where the first question was to give the opportunity to all the panelists to respond to the other panelists presentations and talk about what resonated for you and maybe if there are points of disagreement or at least different priorities. And I’d be very interested to hear, just move down the row and hear what you think.

Jasmin Ansar (01:47:33):
Thank you. I was just reflecting on Vanessa’s amazing report. We really needed this. We need this analysis to keep evaluating the state of this investment program because it’s sort of been in motion for a long time. And I think the one reflection I have is there’s two pieces to this thinking about our presentations. Is the program primarily a tool for emissions reductions and achieving our targets? Or is it an investment strategy that investments that reduce emissions and also achieve other co-benefits and equity kind of goals? And the answer is probably both. But I’ve just noticed that depending on, especially in the legislature, often it can get focused on investments primarily. And I think a lot of legislators think about when they, especially new ones, cap and trade, they think about it, its role in IT as an investment sort of vehicle. And so just a thought and reflection I don’t have, it’s something that I think we’ll have to grapple with as part of the program being revisited of what’s its primary goal and what are we trying to set it up to do because those are distinct pieces of the puzzle.

Vanessa Carter Fahnestock (01:48:57):
I’m not going to lie, I was mostly thinking what I was going to say and not so well listening, but I really appreciated the level. I felt like there was a lot of alignment around what we were saying and when we were prepping for this panel, we weren’t really sure if that was going to be the case and how to structure the panel, but I felt like it was very complimentary. I love AMI that you rooted in the real lives, this is how people are really being impacted, which is so critical for any policy conversation. And I love that you brought us into this new era of cap andry that Michael kind of hinted at as well.

Jasmin Ansar (01:49:36):
Let me just say, I think I agree that actually I think in many ways we were speaking, we complimented each other in what we were saying. I feel like I found Vanessa’s analysis absolutely intriguing and actually very positive on the whole. And clearly there are lessons to be learned in terms of improving both the visibility and the impact even by just sort of reorganizing in some sense how it is delivered. So that was one of the learnings I came away with. And arm, I don’t think I actually disagree with anything you said. I think we basically speak the same, but maybe we see different pathways for getting that.

Michael Wara (01:50:24):
Well, I’m inclined to let the audience ask questions. We have not that much time left, so are there questions from the audience for the panel? Yes, could you identify yourself as well when you,

Speaker 13 (01:50:47):
I had a question because probably for yourself, Michael and Jasmine, based on the first couple of conversation and presentation talking especially about when we revisit cap and trade that we need to really ramp up the amount of reduction for emissions to meet these goals potentially that we’re not on track to achieve. And so two questions around that. One is, is that a systemic construct of the cap trip program? Is it doing its job proportionately correctly and it just doesn’t cover enough of the emission sources or is it underperforming and is that a mechanism, a pricing issue with the actual capital trade program itself?

Michael Wara (01:51:41):
I just like to say one thing, and this is I think a point of confusion for many people because yes is the cap and trade. I’m going to paraphrase Neil, I hope I get it right. There’s been a lot of discussion about needing to ramp up the cap and trade program, make it stronger because it’s we’re not getting the emission reductions we need, we’re not on track perhaps. And is that a function of the program not performing as intended or is it that the program doesn’t cover enough of California’s emissions? So the first thing to say is that the cap and trade covers emissions that are relatively straightforward to measure and that’s a key design criterion. And so there are a set of emissions, maybe 15 to 20% of California emissions that are pretty hard to measure in practice. Some of them maybe could be included in cap and trade, like for example, methane emissions from confined animal feeding operations. We can measure those. We don’t include them for political reasons, but other emissions like the emissions fertilizer application on soils very hard to measure accurately, especially if you’re going to say this farmer here is responsible for those emissions, very difficult. And so they’re not in cap and trade. I think, I guess my perspective would be the issues with hitting the target do not necessarily have to do with the breadth of coverage of cap and trade. They do have to do with the political will to impose costs on covered emitters and also on regular people.

I guess one point of clarification that I would like to make out of my hand to Jasmine is that the current market design, the current design of cap and trade has a price cap. So even if you tighten the cap, if you say our new target is lower than our old target, that’s not necessarily going to change the performance of the program because once the prices in the market get high enough, a RB will have to start issuing extra allowances. And so I actually don’t think that in the current circumstances necessarily true that tightening the market further will increase the chances that we achieve the target. We’re going to have to think beyond that frame to get where we say we want to go.

Jasmin Ansar (01:54:15):
I think the only thing I would add is one of the problems I see is that the program gets evaluated and even in some sense discussed every four years whenever the compliance period is. And I just think that it’s too long period because basically what you need, and this is what happens in Europe, you need to have milestones, you need to have annual review and you need to have constant and I would say almost dynamic adjustment. And that doesn’t occur to any extent and that’s a major I think, problem with the system.

Speaker 6 (01:54:57):
I was wondering are there any lessons learned from other carbon market or market-based mechanisms beyond California to strengthen our own program?

Amee Raval (01:55:15):
The question was are there any lessons learned from other carbon market or market-based mechanisms beyond California to strengthen our own program? So the EJ advocates I work with, there’s so many new folks that have entered the movement since 2017 that we actually sort of had a landscape analysis completed for us last year. Just to summarize the state of the program, its history and I think a lot of what was surfacing is just some developments in other states in the US where there’s linking happening. So looking at Washington state in particular, I know we have linkages to Quebec as well beyond the us but I think and then of course there’s New York sort of program and I think in some ways the EJ concerns are shared. There’s actually been a lot of cross-pollination between New York advocates and California because I know New York just last year was considering creating its own approach. So I will just say movement wide, there’s learnings more from the failings or from California sharing what the limitations are of our programs or gaps. But on the other side I will say we’ve been inspired, I would say by the Washington State’s approach in particular, and I’m sure folks can speak more to the price of carbon and it actually being much higher as well as I think its investments approach which advocates have really supported.

Michael Wara (01:57:13):

Speaker 5 (01:57:14):
Doug Car, electricity sector. And so one of the preface here is that we’re like as many CCAs we’re aiming to fully decarbonize sometimes a decade. And one of the provocative questions I got is none of that’s going to matter because of cap and trade. We can reduce our emissions to zero as electricity. All that’s going to do is open up space to other industry sectors to pollute more to stay under the cap. And I’m wondering if you have any thoughts about how we might politically go about removing our share of emissions as the electricity sector from the cap and trade system so that pools to account for any sectors that have to be,

Michael Wara (01:58:06):
Can I share a perspective on that? So the question was Doug Carpa from wait, which you’re from Peninsula. Peninsula, I always get the C Cs confused Peninsula clean energy and if we reduce our emissions to zero PCE, then someone else covered by the cap can increase their emissions. So would there be some way to retire that chunk so that it’s not marketable to say an oil refinery that then could just keep doing what it’s been doing? This is always a concern with market-based mechanisms. I’m just going to provide a perspective and then I think maybe someone can disagree with me. I think we are in a situation where there’s pretty simple arithmetic on this. To reduce emissions to the 2030 target would require the entire electricity sector going to zero by 2030 and we would still have a significant amount of work left to do. So I think we are not in a situation, we’re actually relying very heavily on the power sector to get very close to zero very quickly if we’re going to have any hope of hitting these targets. And so I think the ambition of the target in some way helps with your concern but it doesn’t fully address it because of the price ceiling.

Speaker 14 (01:59:48):
Tony Turnup from Citizens Climate Lobby, so if CARB does go ahead and makes the program more stringent for 2030, which they’re talking about lowering the captive 55%, you said that was not enough because of the price ceiling and I’m just wondering what else needs to happen. I know there’s a bunch of eja recommendations, but what’s the simple, what else needs, if they do that, what else do we need to make the program effective so that we’ll meet our statutory targets besides just making the program more stringent and lots of other things we need to do too. Repeat the question

Amee Raval (02:00:30):
Was what else do we need to do both beyond increasing the stringency of the program but within the cap and trade program? Is that right? Or more broadly? I

Speaker 14 (02:00:40):
Mean there’s all the justice issues and the other pollutants and the refineries, but I’m just like to hit our emissions targets, what else do we need to do besides increasing that stringency because there was some implication that that was not going to be enough to even just to meet the greenhouse gas emissions goals, much less the justice.

Jasmin Ansar (02:01:01):
I actually think that there’s a lot still to be done and that’s kind of what keeps me up at night if you like. It’s the fact that we do have these targets and we don’t seem to, we just sort of have them out there, but there aren’t, we don’t have the dots that connect that get us there. And just to give you an example of this in one of the strategies outlined in the scoping plan is the reduction in vehicle miles travel, which is significant in the scoping plan and that is meant to deliver a lot of the emissions reductions. But are we monitoring actually what’s happening is VMT is going up instead of going down. And then also at the same time as it’s going up, we’re having other agencies do things like devote money to create more highways or whatever. So again, it seems like all our climate priorities are not aligned and that’s really an important aspect and that’s why one of the points I raised before is I think there needs to be much more constant instead of every four years, we need to be having milestones and things that we can look at at the end of every year if you like and say, well that didn’t work and so what else do we need to do?

How can we intervene and what new policies need to be introduced to get us there?

I would just add to that because so many of us were really involved in the scoping plan. I think yeah, whether we’re going to get to that vmt ambitious VMT reduction goal is a big question mark given the kind of policies we’re seeing our transportation transit agencies enact. But I think I will just say to your question, I do think we still need to think about emissions reduction simultaneously to the kind of co-benefits. I don’t think we can afford separating just for the sake of emissions reductions and investments in affordable mass transit accelerating the decarbonization of buildings, especially in our communities first and foremost like non-residential and residential, not just building decarb but solar storage and microgrids. These are things that aren’t necessarily getting the investments they need at scale. So we’re really not even providing the pilots or for our communities. I mean we have some programs we can really point to, but they remain underfunded or defunded in the case of resilience centers and building decarb. And the last thing I’ll just say is the state right now is doubling down on investments in carbon capture and hydrogen and biofuels. And that’s to me just important in that conversation too around are those the types of technologies that are going to get us to those goals faster? I think that is many. Yeah, there’s other sessions on that and it’s clear where EJ stands on a lot of those sort of what we would call climate dead ends.

Michael Wara (02:04:08):
Well, on that note, we are at time and it’s been a wonderful conversation. I want to thank the panelists for their excellent presentations and thank the audience for your good questions.