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2nd panel – Barry Vesser (Staff, The Climate Center) (01:03:27):
Good afternoon everyone. I’m Barry Vesser with The Climate Center. You need this thing. Can you guys hear me okay? Yeah. Okay. Hear me better now. hi, how are you? So if you’re looking for cap and trade reform, you’ve come to the right room and I’m just gonna do a very quick introduction of our moderator and then turn the show over to her. so thank you all for being here.
Thank you so much.
Katelyn Roedner Sutter is California State Director of the Environmental Defense Fund. And Katelyn leads and coordinates EDFS political engagement and advocacy work in California and supports the organization’s water, climate, energy and transportation policy goals in the state, including implementation of the Inflation Reduction Act. And if that sounds like it’s a lot, it is, Katelyn is always on the go. So with that, I am going to turn it over to you, Katelyn, and thank you all for being
2nd panel – Katelyn Roedner Sutter (01:04:34):
Here. Oh, thank you. Let’s see. I need my, my timer here. So we, we stay on time.
Thank you very much Barry. And thank you all for being here. cap and trade is, is still one of my favorite things to talk about and all the, the ways it can be changed and reformed and updated. So I’m thrilled to see that this is where you would like to be in your afternoon as well. so today we’re gonna focus on sort of the state and future of California’s cap and trade program. unfortunately one of our panelists, Dr. Katherine Gupa had had sort of a personal family emergency today, but we are very, very grateful to have Ammi Raval from the Asia-Pac Pacific Environmental Network join us at the last minute. And, and so I’m thrilled that she just said yes and dove right in to say, I am very happy to talk about this with all of you. So yes, major appreciation for you and that’s also why your app won’t quite match what, what you’re going to to get this afternoon.
I’m gonna introduce our three panelists really quickly and then they’re all going to share, share just some opening thoughts for a couple minutes. We’ll have a few discussion questions to, to get the juices flowing and then really hope to have a good chunk of time to answer I dunno about answer, but, but respond to and have a discussion based on some audience questions. so, so be thinking about those. All right. I’m going to try to keep these brief, but you can read their full bios in the app or on the website. first we have assembly member Al Muratsuchi, who represents the 66th Assembly District located in South Bay and the harbor area of Los Angeles County. a champion for public Education Assembly member Muratsuchi serves as chair of the Assembly Education Committee. He has also served as chair of the Joint Legislative Committee on climate change policies and authored landmark legislation for California to achieve carbon neutrality and dramatically reduced greenhouse gas emissions by 2045.
Assembly member Muratsuchi has attended the University of California at Berkeley and received a JD from UCLA before settling in the South Bay. So thank you for being with us today. Amee Raval is the policy and research Director at the Asian Pacific Environmental Network. through her role at apen, she offers environmental justice and health equity lens to climate and energy policy in California. She has also served on CAR’S Environmental Justice Advisory Committee. She previously worked with the Natural Resources Defense Council on Research and Advocacy, addressing the environmental and occupational health impacts of extreme heat due to climate change. me graduated with an MS and Environmental Health Sciences from uc, Berkeley School of Public Health. And last but not least, Dr. Danny Cullenward is a climate economist and lawyer focused on the design and implementation of Scientifically Grounded Climate Policy. He’s a research fellow with the Institute for Carbon Removal Law and Policy at American University, and previously held research and teaching appointments at uc, Berkeley, and a bunch of other really impressive places.
<laugh>. I’m like, these are getting long. These are all very impressive people, and you should read more about them on the app. I will also say Danny and I serve together on the Independent Emissions Market Advisory Committee for the state of California. So we, we get into a lot of weeds and I, I think we’re both speaking in our, you know, capacities personally and, and with our organizations. But we do work together on I eac. I’m gonna take one more minute here and give you a little bit of background on, on cap and trade. And then I’m gonna turn it over to Danny for some analysis of the current program me to discuss the full cost and impacts of the program. And then assembly member MERT Sushi for a discussion of some potential solutions, which he has authored or, or is authoring.
so a quick, quick background for you. This, this might all be in your brain, but a refresher AB 32 adopted back in 2006, directed the California Air Resources Board to adopt a market-based mechanism to achieve the state’s climate goals. This was an emissions cap enforced by a decreasing number of allowances that are, can be allocated for free. They could be purchased at auction or traded on the secondary market. So that’s where you get the emissions cap and the trading of allowances, cap and trade. The program formally launched in November of 2012. It covers approximately 75% of greenhouse gas emissions from industrial sources, transportation fuels, power plants, et cetera. It does not cover things like agriculture or wildfire emissions, and it also does not cover local health harming pollution like particulate matter. It covers global greenhouse gases. In 2017, the program was extended with AB 3 98 and, and that extended the program until 2030.
This was also when AB 617 passed, which was created a local air pollution program focused on cumulative air pollution burdened that that was intended to be led by by local communities. Last couple of just data points for you. compliance has been at or near a hundred percent over the life of the program, and over 20 billion for the Greenhouse Gas Reduction Fund has been raised by through the state run auctions. and that funds a whole lot of different climate programs. I eac the Independent Emissions Market Advisory Committee, eac, the Environmental Justice Advisory Committee, and the legislature have made many recommendations over the years for how to improve the program, both from a climate ambition perspective and environmental justice perspective. So you’ve got some folks with all of those expertises here today. and with that, I am going to sit down and turn it over to Danny for a couple minutes for some program analysis.
2nd panel – Danny Cullenward (01:10:47):
Great. Thank you, Katelyn. Thank you everybody for being here. I’ll try and move quickly, just some additional background and context on the program to set up some of the challenges we see today as well. Some of the touch points for where you might think about reform. Let me start maybe with the revenue piece, because I think a lot of people are working on the budget right now are dealing with a shortfall, right? We’re no longer in a surplus here. this is a program that brings in, you know, roughly 4 billion per year. it could bring in more or less, depending on how stringently you tighten the program. and I think it’s, it’s something to be thinking about that the revenue side of this is often one of the things that really drives the politics, but is not often as discussed as it might be.
And I think it’s likely to become more of a central focus in down budget years, like the one we’re in and potentially any future years that, that aren’t looking so great. one thing to say about the, the spending side of this, just for context, most of the spending is continuously appropriated through about a 10 year old legislative deal that sets up how most of the funds that are brought in are dispersed essentially automatically to certain programs. And only a small fraction of the revenue that’s raised every fiscal year is appropriated through the normal annual appropriation cycle. let me next turn to the sort of strategic role of the program, because I think part of the, a big part of the challenge to be honest with how the program is operating, reflects the different emphasis the state has placed on the program over time.
So Kaitlin mentioned the program’s about 10 years old when it was first implemented as part of the state’s scoping plan strategy. It was intended to pr contribute about maybe 20% of the emission reductions as part of a broader suite of regulatory activities that the state was planning to achieve our 2020 target. over time that role has changed as it’s been designated in the scoping plans and the climate change strategy documents prepared by the California Air Resources Board. Maybe most notably in 2017, right around the time the program was extended through 2030, the state designated the cap and trade program is being responsible for about half of the emission reductions for our 2030 target of a 40% reduction below our our 2020 target. And that’s a pretty significant shift in emphasis for a much deeper target to take not just 20 or 30%, but closer to 50% of the annual emission reductions burden.
And that’s a, again, a different level of emphasis. there are reasons to rely more on market based policies like cap and trade, which can potentially be much more cost effective. But if you don’t design the program to be stringent enough for those goals, you’ll not hit your goals. So a big part of what we’re dealing with when we talk about some of the challenges with the program is the fact that there are many more allowances or rights to pollute in the program than there has been pollution in the program for a long time. The supply of the right to pollute through these allowances and through additional carbon offsets has exceeded pollution regulated under the program every year since its inception. And a large supply of allowances have been built up in private accounts. People who’ve bought these allowances and are holding onto them, if they keep holding onto them, they can use them to sort of comply without reducing their emissions in line with our targets.
And we can get into the details, but the evidence is, is very robust on this at this point. the other thing I want to tee up as, as we talk about some of the performance considerations in the program, one of the reasons that market prices have been relatively low and so many extra allowances have been available for purchase, is that the program also allows people to buy carbon offsets. So pollution that somebody else claims is reduced somewhere else, typically in the forest sector, that’s about 80% of the allowance, or sorry, of the offset supply. and something close to about half of the allowance bank is attributable to the, the compliance use of these carbon offsets. So we’re letting people take credit for carbon benefits claimed in forests, and they get that credit, and they, they can do that instead of buying an allowance from the state.
And that’s part of the reason we have surplus allowances. It’s not all but it’s part. And to be honest, quite a few academic studies, including ones I’ve been involved in, have found significant performance problems with the Offsets program. The last two issues I want to tee up and the hinder over Army. We’ve had significant concerns around pollution disparity in the program. And for anyone living in a pollution burden community, you know, cap and trade isn’t changing the fact that refineries are major sources of toxic air pollutants. It’s not changing the ozone situation in the valley. and those concerns I think are, are really significant. They’ve not been solved by this program, but they continue to be part of the politics of talking about the program. The last thing to say is the program’s explicit legal authority continues through the end of 2030, but it stops at 2030. There will be a legal and political debate about whether or not that needs to be extended. if you believe the program has a longer lifetime than 2030, market participants will behave differently Under that assumption, my perception is that most people think reauthorization is needed, and if there’s going to be some sort of legislative reauthorization, I think it’s also gonna be really important to talk about these, these issues around allowance, supply offsets, and some of the pollution disparity issues that I’ll leave it to Amee to talk about more in detail.
2nd panel – Katelyn Roedner Sutter (01:15:31):
Take it away.
2nd panel – Amee Raval (01:15:38):
hi, good afternoon everyone. As mentioned, my name is Amee. I work with APEN, the Asian Pacific Environmental Network filling in for Dr. Catherine today. But I think what she probably would’ve shared is very much an align aligned with, I think my perspective EJ groups have been watching CAP and trade for some time. I actually remember I started at AEN in 2016, and so I vividly remember the sort of 2017 fight to extend cap and trade. It was messy and complicated. And so to be, you know, to see where the sort of multitude of sectors that are in many cases represented today at this summit across environmental groups, EJ advocates, the legislature, and leadership as well as the governor Brown at the time, I think is just, it was a really interesting example for me to learn from. And now seven years later, gearing up for kind of revisiting a lot of these issues now.
So appreciate being on this panel and getting to share our perspective. And yeah, there’s a lot of work to do within the EJ community to, I think, think through how conditions have really evolved and changed since 2017 to kind of think through strategically what’s the path forward, I can say for Apen the reason why we’re so kind of why this is such an important topic for us is because of the communities we’re organizing. So aen organizes in Richmond as well as Oakland Chinatown, and now in Wilmington a lot of our EJ organizing has been rooted in the fight against oil refining and the pollution that our members are deeply impacted by. There’s a whole separate concurrent panel happening right now on refineries and sort of the need for just transition and kind of planning to phase out oil in California on the refining side.
So I won’t necessarily go too in depth on the multitude of ways we’re thinking about that in a regulatory sense. However, cap and trade is incredibly important to that sort of set of advocacy, because right now that’s all that is in place to address refinery emissions. And under cap and trade, we’re seeing refinery emissions increasing. And the data substantiates that, not just from independent academics, but from o eha as well. In their analyses, we’re seeing G H G and particulate matter pollution increase within the refinery sector. And so I zoom in there because it’s not working for our communities, not only in terms of global sort of greenhouse gas emissions targets for the state, but locally we’re not seeing conditions improve where we organize. And in fact through negotiations around cap and trade locally we’re inhibited to put in place stronger rules and measures to regulate refineries.
So this is in part where kind of how we’re arriving to the conversation. We’ve also been deeply involved in the revenue side of things. So G G R F exists, it is a source of revenue and important programs that we advocate for. And in some ways in it’s a harm reduction strategy. It’s not to say that G G R F is the only sort of source of revenue and resources to kind of build clean, healthy, thriving communities where we organize, but if it exists, we wanna ensure that the benefits accrue to our communities that you know, across economic health and social and environmental benefits. So we have really shaped many of the pro programs within that. And I think revenue as part of revisiting some of these conversations, revenue will inevitably be part of sort of the future of the program.
and then the last thing I’ll just say, maybe in terms of like our lens, I can speak more to some of our critiques and also like the solutions we’re imagining as we speak, but you know, the scoping plan last year was an important advocacy campaign for us, and we won really important elements beyond, and actually cap and trade and carbon pricing were not discussed at all. it was something we thought might, that might be part of the conversation, but CARB did kind of punt that to this year and beyond to sort of separate rule making. So we look forward to the, the Air Resources Board sort of taking a look at the program, evaluating it as well as legislative conversations about both its performance, the role of cap and trade as part of the larger suite of strategies and roles we need in the state to address pollution in sectors like the refinery sector. And yeah, I think that we put together some robust recommendations as part of the Environmental Justice Advisory Committee that I’m happy to speak to as we go through.
Thanks, Amee and Assembly member.
2nd panel – Asm. Al Muratsuchi (01:20:40):
Thank you. Thank you for inviting me to, to join this, this great panel. I, I’m, I’m here to, to learn from you know, my fellow panelists as well as our moderator as much as from folks in the audience. I, I, I thank you for all that you’re doing in your communities and, and organizations. so I, I want to talk at high level and, and then maybe in discussion we can get down more into, into details. But my, my name is Al Meucci. I’m an assembly member from the the, the, the coastal District of Los Angeles County the, the South Bay area. basically the area between Los Angeles, south of Los Angeles Airport and north of the the Port of Los Angeles. similar to, to aami. my first foray in, in getting involved in, in these issues was related to a refinery in, in my case it was the Torrance Refinery.
I represent the city of Torrance. My, my district has two, almost three other refineries in, in my district you know, representative of Southern California’s long history of being an oil producing, one of the leading oil producing regions in, in, in the country. but what I quickly learned, you know, first with my, my efforts to try to make the Torrance Refinery safer by trying to ban this highly toxic hydrofluoric acid that’s being used to re as part of the oil refining process at the Torrance Refinery to, you know, subsequent efforts with I, I introduced the, the first of several bills to to try to establish oil drilling setbacks to protect low income communities of color from from, from the environmental impacts of oil drilling in the backyards of of, of people’s homes and schools and, and, and parks.
and, and then last year, I, I had two, two bills that was seeking to establish aggressive goals to reduce our reliance on fossil fuels as, as well as to, to increase transparency in the cap and trade market to try to get at what Danny was talking about in terms of the, the the, the, the the abundance of, of allowances and offsets that’s going to prevent us from reaching our, our goals in terms of greenhouse gas reductions. That every time I introduce these bills, I, I, you know ran smack d and into the wall of of, of, not one, but two of the most powerful political interests in the state capitol. The big oil represented by the Western State Petroleum Association and big labor as represented by the state building and construction trades unions, which represents many of the refinery and also fossil fuel industry workers.
and so, you know, if it’s not hard enough that that so many legislators re receive you know generous campaign contributions from, from big oil and are not ashamed of it. but you know, you combine that with with big labor as representing by, by the state building construction trades. you know, labor is, is the, the backbone of the Democratic Party is the backbone of, of of you know, campaign support. It’s, it’s, it’s, you know, they, they you know, r and essential part of the the, the, the, the Democratic party as, as we all know. but when you combine those two powerful forces together, it, it becomes extremely challenging to pass anything that’s trying to reduce our reliance on fossil fuels and, and to fight climate change. and so that leads to, you know, just one example that I wanna share from last year.
I, I, I had a bill I, I never remember my own bill numbers, but it was AB 27 93. and it, it was a simple transparency bill. It was, it was trying to get at what Danny was talking about, that there, there are too many allowances out there. there, there’s you know, there’s a in, in my opinion abuse of the, the, the use of the offsets that that is going to prevent cap and trade from working the way it’s supposed to be working in terms of creating the, the the, the, the, the market based prices to, to incentivize all of the polluters to reduce their emissions. as, as Danny talked about, there’s so many allowances, the number of allowances out there exceed the, the amount of pollution that they’re emitting, that, you know, as we get closer and closer to the 40% greenhouse gas reduction goal by 2030, you know, they, they can just pull on, pull out all those allowances without reducing their, their actual emissions.
And, you know, the end result is that, is that we’re gonna continue down this path of destruction for our planet. And so and so I introduced a simple transparency measure to try to you know, establish some, some public banking metrics. I mean, this, by the way, is, is, is all following the, the great work that that, that Katelyn and Danny are doing with, with I eac, the independent I never forget, I never forget the acronym, but the the, the, the independent committee that advises the the, the senate and the legislature on cap and trade and, and, and these issues, you know, they have consistently said that, that we, we need to, to reign in the number of allowances out there because it’s preventing us from, from meeting our greenhouse gas reduction goals. but, you know, so I had my bill, and then Danny had worked with ben senator sidney com lagger on a, a similar bill on the Senate side.
And the, the, the bottom line is that they both died on the assembly floor. They, they both died. they were, they were killed on the assembly floor. You know, it was a full employment act for the oil lobbyists. you know, they were working the halls, you know, going to all the less legislators. and and, and, you know, so we couldn’t even get a simple transparency measure passed. in contrast, last year, there, there was a, there, there was a, a package of, of, of climate bills including one of mine that, that established the that codified the carbon neutrality goal by 2045 that Governor Brown had initially established through his executive order as well as, you know, set the 2045 goal of reducing greenhouse gas emissions by 85% by 2045. That bill, along with the oil set drilling setbacks bill, you know, among others, those were only able to overcome the combined political opposition of big oil and big labor only with the strong leadership at the backing of the governor, governor Newsom.
you know, and, and, and so I, I just want to share all this I, I’ve reintroduced the, the the allow the cap and trade transparency bill. and, and, and you know, mostly in the same concept, I, I’m also working with the Citizens Climate Lobby. I, I see Tony Cerna in the audience you know, to to as, as we’re you know, getting to the discussions, early discussions about whether to reauthorize the extension of cap and trade, and, and whether it’s going to, you know, we’re, we’re, we’re going to, you know, address these issues like you know, to what extent is, is cap and trade allowing and, and, and perpetuating, you know the, these disproportionate amount of pollution and environmental justice communities. you know, I I, I, I wanted to introduce a bill to at least get the debate, the public conversation going about whether some of those cap and trade revenues should be going back to citizens in, in the form, you know, the, the the, the, the approach of, of the carbon fee and dividend that the Citizens Climate Lobby has been fighting for years.
you know, as energy costs continue to rise can, can we build support for our climate agenda by getting some of those cap and trade revenues back to California residents, California citizens in order to build the, the political support for our ongoing climate agenda. as, as am talked about, you know, there have been these constituencies built with the CAPA trade revenues you know, where I’m, I’m hearing people saying, well, why would we want to give it back to the people we want to have it for climate programs, or we want to have it for, for organizations that, that are fighting you know or, you know, they’re doing organizing efforts to, to address air pollutions in, in local communities. I mean, it’s, it’s, it’s gonna be a, a, a difficult conversation. You know, we’re, we’re, we’re exploring ideas like, you know like having revenues above and beyond existing revenues to go back to citizens. but I, I wanted to throw that out there. would love to hear your thoughts.
2nd panel – Katelyn Roedner Sutter (01:30:26):
Thank you so much. And, and
I’ll say thank you for, for taking on so many of these really important and really challenging issues in the legislature. it’s, it’s been a pleasure to work with you on many of these over the years. so, so thank you for that, that leadership. I think in, in various ways, all three of you touched on the issue of offsets. And so I wanna pull, there’s so many threads to pull here, but I wanna pull that one and get your thoughts on, you know, what, what is the role of offsets in the program? Are, are they necessary? If they are necessary, from your perspective, what is, what’s maybe something that could or should be done differently with our offsets program? so sort of a wide ranging question, but would love some, some more reflections on, on the offset part of this. I, maybe, I’ll, I’ll start with you, Danny. That’s alright.
2nd panel – Danny Cullenward (01:31:25):
I will be the most negative <laugh>.
it’s a really good question. So I think the sort of common line that’s given around carbon offset is they’re a small part of California’s program. They allow some compliance flexibility, and it just makes it cheaper and easier to comply with a given target. I think that standard description gets pretty much everything wrong, and I do mean almost everything wrong. If you look at the compliance data, the number of offsets that have been surrendered is, is, you know, looking like a substantial majority, possibly even all of the net reductions claimed by the program on paper. It’s a huge part of how people actually, actually comply with the program rules. Even though you can only surrender just a small percentage of your emissions in the form of, of offsets, because the program is only required thus far, small reductions, it turns out that it’d be a pretty large chunk.
The second thing is, is the, I think personally, I think the program is, is run very poorly. I think a lot of the projects that are claiming credit are claiming business as usual activity. There has been a golden era of investigative journalism on carbon offsets over the last three years. Every single deep dive, an independent academic study has come back with the same profoundly negative conclusions about the performance of this and other large scale offsets programs. I think what offsets programs do are, has twofold function, and I want to emphasize these functions are very important, even though I disagree with how it’s being done. One, it reduces compliance costs for industry. So one of the reasons to have offsets is to lower the market price for political reasons. If that is an objective, I think it can be better accomplished through designing the market to end up in the price you want.
The second thing it does, and this is very, very important, is it directs revenues to particular sectors and activities where we wanna direct revenues. And so we know, for example, we’re underinvesting in forest conservation, we’re underinvesting in wildfire mitigation. There’s all sorts of things we ought to be doing in the forest sector. My argument would be the way we’re doing it right now is that not actually delivering those things, but that’s what offsets currently do. And the way to deliver those functions, in my view, in a better way, is to move away from offsetting, if possible, use the funds raised by the program to spend the things you wanna spend the money on and design the program with limits on how high or low the prices can go to target, where you want the prices to go, rather than use offsets to get there. An alternative way of doing this, which, which Katelyn and others may wanna speak about, Washington State has basically said, if you’re gonna use offsets, we’re gonna reduce the supply of allowances when you do it. And that mitigates, I think, some of the concerns and would be a significant step forward if California were to consider that.
2nd panel – Katelyn Roedner Sutter (01:33:45):
Yeah, thank, thanks for bringing that, that piece in. I think that’s a really, personally, I think that’s a really interesting idea. and, and certainly something EDF has looked at in the context of Washington State assembly member or e would you like to share any thoughts on offsets in the cap and trade program?
2nd panel – Amee Raval (01:34:02):
I can just say from, so I don’t wanna say that I speak on behalf of sort of all of the EJ advocates that we work alongside. I think that we are still in deep conversation about strategically the types of changes we might endorse. So I do wanna be really clear about that. And the Environmental Justice Advisory Committee did put in place through the scoping plan update last year, a set of rigorous recommendations on topics like free allowances and offsets and no trading zones. So just to speak to that, I think we think of offsets as an accounting gimmick, and our messaging has always been cap and trade. It should, it is one tool in a suite of, of regulations and strategies the state adopts to achieve our emissions reductions goals in California. And that sort of move us towards a clean energy economy.
So and we do need to get to phase out, phasing out polluting fuels. And so cap and trade is one tool in a suite in the toolbox, and we need a suite of strategies in place to address pollution from all of the sectors that we’re aiming to address. That’s all to say that the more we put in place strategies that achieve direct emissions reductions, the less we need to rely on accounting gimmicks like offsets that I think enable polluters to pollute. That’s our sort of frame and message. and, and in fact, the Ojo report actually finds that four of the top five entities that use the most offsets own petroleum refineries and refineries contribute more to particulate matter dis disparity by Callum virus, green score and race and ethnicity than any other sector. So all to say like, we kind of have a lens on the types of facilities and industries that are taking advantage of the system, gaming the system through tools like offsets.
So in the eject recommendations we put forth a bold statement of like, maybe we should consider removing, you know, taking offsets off the table completely as a sort of compliance mechanism. and if that’s not done, what does it look like? Or if that’s not politically viable what does it look like to think of offsets that are only able to be complied with at the source? So not somewhere far away that doesn’t do anything to local pollution, but actually, and, and sort of happens out of state, but actually means that we are actually, we’re seeing emissions reductions at the source. Some thoughts.
2nd panel – Asm. Al Muratsuchi (01:36:49):
Thank you. You know, I, I, I wanted to go back to the, the example I shared about, you know, the, my, my simple transparency bill as it relates to not all allowances, but also offsets to, to again, emphasize the point that, you know, in the legislature, we, we try, we, we, we, we try to be problem solvers. We try to focus on what is politically what can we politically accomplish. I mean, I know that that often, you know, the, the, the activists represent the ideals, you know, and, and we always look to the activists for, for, for the moral leadership in terms of what is the right thing to do, right? But, you know, like cap and trade, I, I was here in the legislature when, when we extended cap and trade, and I remember there was a, there was a big debate between, you know, those that, that focused on what is, what can we realistically accomplish to, to try to to reduce our, our greenhouse gas emissions in order to, to to, to fight climate change versus, you know, you know, what, what is the ideal?
And we knew that, you know, we, we were hearing all the arguments from the environmental justice communities about, about cap and trade you know, basically, you know, pollution credits giving, giving pollution permits with, with the, the biggest costs, you know, concentrated in, in low income communities of color. and, and, and yet, you know, that’s where we landed, that, that’s where we landed, because that, that was, at that time, seen as the best that we could do at, at that moment. So going forward, I, I, I think, you know, I I just want to emphasize whether it’s, it’s trying to to, to restrict or, or, or control the, the, the use of offsets or, or limiting offsets altogether. I mean, ultimately, it, it, it, it, it comes down, a lot of this comes down to, not to the policy of offsets, but it’s the politics. You know, it’s that each and every one of you in your communities and your organizations, you know, we need to build our capacity to, to be able to counter and overcome these powerful, very, very powerful, very well, you know, deep pocketed and, and, and, you know, with, you know strong political relationships of big oil and big labor. that, that, I, I, I just wanna emphasize that political aspect of, of, of our fight.
2nd panel – Katelyn Roedner Sutter (01:39:23):
I think that’s a great, a great point. I, I really appreciate all of your reflections on, on sort of, not only offsets, but, but sort of the role of this program and some of the ongoing challenges and, and potentially opportunities within this program as well. I know we started a little bit late but I, I do wanna make sure we have time for, for audience discussion here. So I think let’s transition to that <laugh> in, in the very back, we have standing room only here for cap and trade. I’m, this is fantastic. Go for it.
<laugh>, I want to thank assembly member for championing two unpopular bills, and, but the three 50 Bay Area did support and understood that they were incremental, but thank you so much. You are true champion. My question is, without having Governor Newsom or whatever, governor by 2030 more in the pocket and more supportive of making changes, considering this was one of his pet passages way back when a Brown’s pet pa passage are we ever gonna really be able to make any big movement in this area of changing Captain Trick?
2nd panel – Katelyn Roedner Sutter (01:40:40):
Who, who would like to start
<laugh>? I’ll def Frog and jump
2nd panel – Asm. Al Muratsuchi (01:40:43):
In. I <laugh>. Okay. I mean, I, I, I, I can just start and you know, I I, I, I think Governor Newsom deserves credit for taking the leadership on the climate package last year. I agree. Yeah. I, I mean, he, he, he I, I’ve been trying to emphasize when, whenever I’m in the company of the gov, the, the few times I’m in the company of the governor that that it was only because of his leadership were we able to get that climate package passed. And I think the, the biggest test, which I know is, is being challenged in the courts now, is the oil drilling setbacks bill, right? I mean, that that my, my bill to establish oil drilling setbacks died in, in the Senate Senator Scott Wiener’s bill to establish oil drilling setbacks died in the Senate.
and and you know, and it was only when Governor Newsom got behind that, that we were able to to, to, to ram that through and, and, and get it signed in, in, into law. And so I, I think I, I suspect that you know, governor Newsom someday, you know, may wanna run for president as the climate president. And and I think that that’s, that’s very important that we, we, you know, because again, emphasizing there’s the policy and then there’s the politics. We, we need to, to build that political capacity to, to support an aggressive climate agenda. That that’s what it comes down to.
2nd panel – Katelyn Roedner Sutter (01:42:14):
I, I will also say, I do think with this extension coming up in the next several years, we have a built in opportunity to rethink this program. And, and I will say, I mean, from EDFS perspective, we think this program’s very important, but it also needs to be reformed, and it needs to be updated, and, and the legislature is going to have to take a vote. And, and so there is an opportunity there. I think we also have both a challenge in the opportunity in that there’s a lot of new members. I mean, Mr. Meucci is an expert on cap and trade, but a lot of members do not understand the program, which means we have an opportunity to do a lot of education in terms of, you know, what, what is the role of offsets? What are some of the, you know, we talk about a cost effective program, but what are the other costs that are being born, and how can we address those? So, so we have a natural opportunity in the coming years, which is really exciting. yes, go for it.
Alright, so first off, yes, thank you Senator assembly member very much your chair of the Assembly Education Committee. And every year California graduates 400,000 voting age kids a year. So I’m wondering if there’s some kind of combination between getting those kids geared up, climate literate, understanding what’s going on, what their role can be from a consumer, from a voting perspective, from supporting the legislation to help this in the next round of of bills that make sense for the general public, but maybe not for the oil companies per se.
2nd panel – Asm. Al Muratsuchi (01:43:43):
Mm-hmm. <affirmative>. So, you know, I, I I’m, I’m so proud to of, of, of my daughter, you know, when she, she was learning about climate change in her, at her elementary school, you know, they were, they were, you know, talking about how, you know, why is the car on a hot summer day hotter on the inside than the outside is because it’s capturing all the hot air. And, you know, and she had that understanding of, of of you know global warming and, and, and the effects of greenhouse gas emissions. And, and so, you know, I I just highlight that to emphasize, I think what a lot of us know that, you know, the, the, the, our students now, the, the, the, the, the next generation, I mean, they, they are learning all, all this, you know, in school and, and it is already incorporated into California’s curriculum standards and, and framework. I, I believe it was Senator Fran Pavley, one of my heroes who, who got, got a law signed into a bill signed into law that that required that that the science of climate change be, be taught in, in California’s public schools.
And then it was updated in 2018 when Senator Ben Allen with SB seven 20 put climate change and environmental literacy in the education
Public. There we go. So we’re
California’s in the lead in whole country.
2nd panel – Amee Raval (01:45:02):
I, I would say that young people are definitely also demanding transformative, like real climate solutions. And, and so where a market-based mechanism like cap and trade fits into that imagination, I think is, I think just an interesting thought exercise. I feel like our young ac pe, our young leaders, youth activists, thinking about even appens youth leaders, like they’re pushing for and demanding, like, we don’t have time. We don’t want inherited generation, you know, inherit a world that is burning and we need solutions like phasing out fossil fuels, polluting fuels as quickly as possible, putting ourselves on real timelines and direct emissions measures to sort of end oil extraction, refining in places like California that are leaders. And so I think about that in terms of like where cap and trade fits into that conversation. not to say there isn’t a role, but I think that we need to also be able to imagine and compliment in understanding political realities, also these kind of more transformative regulations and policies as well. Mm-hmm. <affirmative>,
2nd panel – Katelyn Roedner Sutter (01:46:10):
Yeah. Other cap and trade questions.
Yes. Go for it.
Is there anything that’s politically viable in the next iteration of, of cap and trade that you think you could share now as like, yes. Just, you know, throughout their California had emissions vendors that was above and beyond national length standard. What about our own industry specific cost of carbon, like social cost of carbon metric integrated with their own tax code? You are oil, this is how much your carbon costs, you are mm-hmm. <affirmative> an EJ organization, Hey, here’s your tax rate.
2nd panel – Katelyn Roedner Sutter (01:46:59):
Mm-hmm. <affirmative>, the question is about an industrial cost of carbon sort of being integrated into this policy framework.
2nd panel – Danny Cullenward (01:47:07):
I guess maybe one thing to point out, I think one of the reasons this is such a challenging issue to work on is you try and reform the CAPA trade program. It affects every major regulated industry in the entire state. And there’s, there’s something in your question that really gets at, I think, something very important. What if you did it sector by sector, industry by industry? Could you push farther in some places faster? And I think the answer to that question is yes. you know, I don’t know whether the air Resources board or the current staff who run this program are interested in exploring those kinds of things. I would be skeptical that they would be. but I think there’s something in your question that, that sort of highlights a path forward, which is the more concrete we can get about with what’s possible sector by sector, the faster I think we can move.
I’ll also just say to the extent target cap trade reform sounds depressing or difficult. You are looking at all of climate politics in one instrument. So, so don’t see it as just like, oh, it’s an impossible problem. You’re, you’re seeing the reflection of all the problems we all work on, sort of in one integrated policy. So it’s easy to be like, ah, I don’t know how to make progress in the next six months precisely, because none of us like can wave a magic wand and fix the climate problem. but I do think, you know, just to, to throw this out there, Katelyn, I agree with you entirely. There is going to be a legislative extension conversation. So developing well thought out policy proposals about reforms for tracking outcomes, systems for reallocating funds back to people, having those ideas ready to go is actually maybe one of the most important things. Even if you can’t solve those problems tomorrow, there is going to be a big discussion about this soon. And having those ideas sharpened and connected to grassroots mobilization, I think will be extremely important.
Well said. Yes, sir. Have
A slightly different question. so we know inherent and a system like Captain Trade is it always have to have emissions or you don’t have funding. and so we’ll never get to zero greenhouse gas emissions with this system of any of the panelists given thought to, what would it take to dismantle this and put in place a actual legislative policy path that will lead to zero emissions?
2nd panel – Asm. Al Muratsuchi (01:49:14):
Good question. Well, I mean, I could take the first crack. I mean, the, the legislature has turned to the Air Resources board to come up with the scoping plan to, on how, how to get to, you know, net zero carbon by buyer before 2045. I mean, quite frankly, the, the, the legislature doesn’t have the, the, the capacity or the knowledge to be able to, you know, on a day-to-day basis, you know, focus on the issue of, of climate change. And, and, and that’s why it’s largely, you know, delegated that responsibility to the air resources board.
2nd panel – Amee Raval (01:50:05):
I guess there’s, there are many things in your question, but the piece on revenue and being tied to that, I do think that the revenue that comes from cap and trade does not have to be the only thing we rely on for, like, the types of air pollution mitigation and climate resilience programs that we need in our communities. It’s a source, but it’s not the only one. It shouldn’t be the only one. And I think from LA, the past few years of budget surplus, now we’re in a deficit. So that’s its own context, but we learn to think about a whole of government approach to funding climate that it’s not just G G R F. And I think there’s also other transformative types of, like revenue measures we should be able to imagine. Like, whether that’s bonds or other, you know, there’s conversation on oil, severance taxes, wealth taxes. I mean, we just need to expand that toolkit as well so that revenue isn’t the piece that drives kind of some of the conversation around reforming, revisiting carbon pricing in California.
2nd panel – Danny Cullenward (01:51:10):
I’ll add only if you think we wanna move to higher carbon prices, which lead to higher energy cost impacts for rate payers, and you wanna mitigate that by rebate some of the money, as Mr. Marucci’s talked about, I don’t think you run into that problem anymore because it, it sort of takes care of itself. It’s moving the money right back to the kinds of people who end up paying for it. I, I’m also personally not convinced we have too many programs that are hooked on G G F funding right now. High speed rail is probably the, the one that is sort of most concentrated in terms of its footprint. and, and I agree in, in low budget years, the idea that you’re gonna want some predictable revenue for some period of years, it’s not a forever solution. But that strikes me as at tractable problem, especially if you’re asking a bu, you know, where should we sort of cut that off and say the money goes back to people. Mm-hmm. <affirmative>, I think that becomes a much more manageable problem respecting this, this concern you’ve raised.
Mm-hmm. <affirmative> also, I just want to appreciate for opposing wispa as a local organizer in Sacramento as absolutely the demonn incarnate.
2nd panel – Asm. Al Muratsuchi (01:52:11):
I mean the, but, but, but the, the, the political challenge, you know is, is that often it’s, it’s not just all the campaign contributions that, that the big oil is giving to legislators to get elected, but it’s also, you know, the concern that, you know, like say like a oil severance tax, you know, the, the, the argument that we’ve, we’ve all heard before, you know, is that gonna just be passed on to consumers mm-hmm. <affirmative> in the form of higher gas prices. and, and yeah. You know, and that, that was a, a big discussion in this latest bill that the governor championed for the the oil industry windfall profit penalties. you know, one of the biggest concerns was whether any kind of penalty or tax, you know, was gonna be passed on to consumers. And so I I, I, I appreciate your, your, your comment, but I, I just wanted to remind us of, of, again, of the, the political challenges of that that we’re dealing with. We
Live in a capitalist society, <laugh>
2nd panel – Katelyn Roedner Sutter (01:53:17):
<laugh>, so we, we are at time, but like I said, we started a little late. So if we have one quick question, I’m gonna use moderator’s prerogative and say, we’ll do one more quick question and, and then get outta here before the next panel needs to be in here. <laugh>, there’s no such thing as quick questions with cap and trade. Yeah. <laugh>, yes.
Probably open questions but what are you folks hoping if, if cap trade was extended and you could wave thatAnd, what, what kind of, what are you hoping that it manifests as? Like, what, how does that
2nd panel – Katelyn Roedner Sutter (01:53:56):
Look? That was basically my back pocket question, so well, well done. What if you could wave a magic wand?
2nd panel – Danny Cullenward (01:54:02):
I got three asks. You have a rule for dealing with having too many allowances. So a system based on Mr. Marucci’s way of tracking these outcomes, we need a rule to deal with that. Second thing is we need to confront offsets. They’re not working, we need to do something about it. Mm-hmm. The third thing is we need to answer that. We can take to Amee and Dr. Katherine and all the other good folks in the EJ community and say, you have real concerns about pollution disparities. Here is some feature of this program, whether it’s facility level caps or other rules to address pollution disparities in specific communities. We need an answer to the concerns that communities raised. Those are the three asks. You get those three things, I think you have a very workable approach. And I wanna say, if somebody’s been very loudly critical of this program, we prefer to have it than to not have it.
We would prefer to make it work than to leave it the way it is. And it’s easy to come into this and say, this is a really dumb program, and I will go on and on about its flaws. But you would much rather have this tool in your toolkit than not have it. The trick is to not overly on it. The trick is to look for opportunities to make it work better. I’m optimistic about both. thanks. In, frankly, in large part to to, to Katelyn work and the leadership of Mr. Meucci and others in the legislature, I’ve really been tackling an unpopular topic for many years. It’s very important.
2nd panel – Katelyn Roedner Sutter (01:55:08):
<affirmative> Amee, your magic wand.
2nd panel – Amee Raval (01:55:12):
I think that, I mean, definitely a robust conversation around addressing those loopholes that I think the EJ community has been uplifting for some time. And I think, again, there’s data and reporting and the IMAX work that sort of is able to outline and, and substantiate. So definitely efforts to address those loopholes. I hope that we’re, as EJ advocates not tokenized as part of the conversation, I wanna to sort of be at the, in a way that meaningfully takes our concerns seriously. And I don’t think, I mean, I think some things could come out of cap and trade reform, if that is the direction, like facility or sector specific caps for the refinery sector where emissions are increasing under cap and trade. But I also think there’s other rules, resources, and processes that need to be put in place to phase out refining in California and protect refinery communities and workers in the process that I hope can be kind of a complimentary part of the conversation.
2nd panel – Katelyn Roedner Sutter (01:56:17):
Excellent. Thank you. Assembly member.
2nd panel – Asm. Al Muratsuchi (01:56:20):
I, I, I just wanna wrap up by, by by saying I, I, I’m gonna continue to rely on <laugh>, the, the, the real leaders. you know I mean, you know, I, I I, I look to, to Danny’s you know brain to you know, to, to, to guide me on, on what, you know, policy goals we need to, to, to, to, to continue to work on you know, Amee, you know, represents the, a, a powerful environmental justice movement that is making sure that we’re not just, you know, focused on greenhouse gas emissions, but we’re focused on air pollution, all kinds of pollution and the backyards of, of, of people, especially low income communities of color. And, and last but certainly not least, I mean, LA the, the, the, the cap and trade transparency bill that I worked on last year was with the leadership of Katelyn and the Environmental Defense Fund. and, and so, you know, that, that just highlights that, that legislators, you know, we’re, we’re just partners in, in this effort with all of you, with, with all of the organizations representing here. We, we, we, we were, we are, we’re just partners to, to work together on this collective fight against climate change. And so, I, you know, I, I look forward to working with all of you.
2nd panel – Katelyn Roedner Sutter (01:57:31):
Thank you very much. I think that is the perfect note to end on. Thank you all very, very much for, for being here and squishing into kind of a warm room. but really, really appreciate all of you and keep, keep the questions coming later.
No, no, I don’t think that. No, no, no. I just wanna make sure. No, I know. Thank you so much and thanks so much for transition planning. We’re still working. Question that connection.