Comment Log Display

I am writing to you from México, where I have been in Cancun during
the recently concluded COP16 climate change negotiations.   After
attending the COP14 in Bali in 2007,  where there was great hope
that the post-Kyoto process would lead to binding international GHG
reduction targets, the non-binding, minimal-at-best results of
Cancun provide little hope that necessary action will occur first
on the national and supra-national levels. Therefore, to deal with
the already present global climate change catastrophe, we must act
forcefully at the state and local levels. This is where the
proposal in front of CARB to grant free allocations to industry
fails miserably.

I am a Green Party member. As Greens, we favor a True Cost Pricing
approach  to economics, where the price of goods and services
embody their true environmental costs. Sending environmentally
accurate price signals to consumers helps them make
environmentally-friendly choices, while rewarding companies that
act more environmentally sound.

In terms of carbon pricing, Greens generally favor carbon taxes
over cap-and-trade schemes, because carbon taxes provide the most
direct path to internalizing carbon costs and also provide more
predictability in cost, are simpler and faster to implement, and
are less open to manipulation through the political, legislative
and/or regulatory process.

For these reasons, many Greens are extremely disappointed in the
CARB staff recommendation to implement a cap-and-trade scheme
instead of a carbon tax. Nowhere could this be more clear than in
our opposition to the staff's recommendations to grant free
allocations to covered industry
(http://www.cagreens.org/press/pr101214.shtml).

The relevant issue with these free allocations is not leakage risk,
but whether California can provide leadership by showing that an
economic model that honestly and fully internalizes the
environmental costs of burning carbon can work for consumers and
producers.

Research has demonstrated that even with no free allowances, and
even for energy-intensive industries, changes in retail electricity
prices are likely to be small.  California led the way to national
emission control reductions in 1970 by implementing its Catalytic
Converter law, by showing that consumers were willing to pay a
little more for environmental protection. We can do it again now on
GHG emission reductions, but not if we give away the right to emit
for free.

The irony in the rationale to grant free allocations is as the
staff report states, "Free allocation needed to minimize leakage
will be maintained until adoption of equivalent carbon-pricing
policies by other jurisdictions eliminates the leakage risk."  Is
'waiting for others' what leadership is all about? 

Putting aside that the political conditions which led to the
adoption of AB32 in California may not even be present in other
states for some time, what happens if other states actually do
adopt the same model as California? Since the proposed free
allocation model fails to accurately internalize carbon costs,  we
will then have proved little about industries' actual ability to
truly adapt to such costs, and therefore only have delayed needed
and sufficient action to our planetary crisis.

The absurdity of this free allowance is exactly why many Greens
tends to favor carbon taxes over cap-n-trade, and why if the CARB
board adopts the staff recommendation, it would be an abdication of
historic proportion of our state's environmental leadership role.
Given the size of California's economy as the eighth largest in the
world, we have the opportunity to demonstrate that nations, not
just states, can prosper with fully internalized carbon-burning
costs. 

In the post COP16 world, we desperately need such an example.
Therefore I urge you to rise to the occasion and seize this
opportunity for global leadership.  Please eliminate the free
allowances from the regulations governing the cap-and-trade program
you approve.

Sincerely

Michael Feinstein
Co-chair, Green Party of the United States
Former Mayor and City Councilmember, Santa Monica, California
www.gp.org/committees/steering/sc-bios/Mike-Feinstein.php