Comment Log Display

December 10, 2010 

To: The California Air Resources Board 

Re: Comments on the Proposed Regulation to Implement the California
Cap-and-Trade Program 

Dear Chair Nichols and Members of the Board, 

I want congratulate you and the CARB staff on the hard and diligent
work you have done on this complex and critical task.  It is clear
from the resounding defeat of Prop 23 that the public wants this
legislation implemented. You have a historic opportunity to not
only do great things for California, but also to create a model for
the rest of the country that is effective and fair. CARB staff have
done a fine job in many areas, but I feel that to ensure a
sustainable and effective system of carbon reduction we need to
strengthen the regulations in the following areas:

-	100% auction of permits 
-	Compensation for consumers with a dividend
-	Carbon fees to fund important programs 
-	Limited and responsible offsets

Utility Rebates: For the utility sector, CARB has proposed a
combination of free allowance giveaways and (secondary) auctions. 
CARB wants the utilities to pass along the subsidy to consumers in
a way that encourages conservation.  The Economic and Allocations
Advisory Committee (EAAC) report did a great job explaining the
flaws in the PUC/CEC recommendation to allocate to utilities. The
EAAC recognized that providing a rebate through utilities (showing
up only as a line item on electricity bills) shields consumers from
the price signal and discourages changed behavior. Separating the
return of money from the utility bill is critical for sending any
price signal at all to residential customers. There is no
environmental benefit from keeping people’s utility bills low.

Therefore, I support the proposed regulation’s inclusion of
consumer rebate as a use of allowance value. I believe the most
direct approach to this is a “lump-sum transfer” which could be
implemented through a dividend check.  The customer would still
receive the carbon price signal on their utility bill, but would
receive a rebate check to help buffer them from the regressive
impact of increased electricity prices.  

 


Dividends: The EAAC was also clear that dividends (or tax cuts)
should be a majority use of allowance value, not just another use
of allowance value comparable to any other. Dividend checks to
every California household do help with the costs that will be
passed down to consumers.  But they also recognize the shared
ownership of the commons, and that the first priority is to return
the value of this commons back to the people.

AB 32 requires that the regulations that your board approves
“ensure low‐income communities are not disproportionately
impacted.” For this reason tax cuts do not make sense, because they
do not help the people most vulnerable to higher energy prices. 
Without a dividend or rebate low and middle income citizens will be
disproportionately impacted by increased energy prices creating an
economic and political obstacle for the smooth implementation of
the law. 

If dividends are included in the first compliance period, they may
be used as a feature to sell the program to the public up front. 
They will build political support for both energy efficiency and
climate protection over time and demonstrate to the rest of the
country that this complex issue can be solved in an equitable
fashion.  Not including dividends will give the impression that
CARB is more concerned with the impact of these regulations on
businesses than on consumers.

The proposed regulation requires the collected revenues from the
auction of transportation sector allowances be used for public
purposes. There are many possible uses of auction revenue:
government programs and investments, a Community Benefits Fund, and
more. I urge CARB to strongly recommend to the governor and
legislature to use the funds as the State’s Economic and
Allocations Committee recommended: 75% dividends and 25% other uses
including a Community Benefits Fund. 

Offsets in the Forestry Sector: CARB needs to clarify that the
forest protocol does not permit forest offset projects to generate
credits for converting a diverse, natural forest to a simplified
even-age stand.

Thanks for your work on this for the benefit of the planet and
future generations.  I will look forward to hearing what you
decide.

Sincerely,

Barry Vesser
P.O. Box 638
Occidental, CA 95465