I, for one…

The California Air Resources Board* is likely to approve the AB 32 Scoping Plan today, which makes it as good a day as any to open this blog. You can watch Air Board meetings here.   What does that mean, that the Air Board is adopting the AB32 Scoping Plan?

Well, the Air Board is an executive agency, part of the California EPA. It reports to the governor. The Air Board is a board of political appointees. Actual people sit on this board and decide things. Used to be they decided things about air pollution, but that mission was expanded to include greenhouse gas emissions, including carbon dioxide.

AB 32 was a piece of legislation signed in 2006. It gives California until 2020 to cut carbon emissions to 1990 levels. It put the Air Board in charge of carbon and greenhouse gas emissions, which pretty much means they’re in charge of everything everywhere. It was a very broad grant of authority to the Air Board. So what will the Air Board do as the boss of everything?

Well, they tell us that in the Scoping Plan. The Air Board just spent two years writing a Scoping Plan. They held meetings and meetings and meetings. They drafted chapters, one for each sector of the economy. They ran models and did calculations and figured out how each sector was going to reduce greenhouse gases and by how much. They released a draft, took public comment, and then released a very similar next draft.

The measures in this first Scoping Plan are pretty much the low hanging fruit. These are measures that are concentrated (kinda like point-sources) and quantifiable. They are efficiency improvements, taking up slack. The Air Board thinks that many of these measures will be profitable for many sectors, have quick pay-back periods. Industry groups aren’t convinced. So how will they make all these emission reductions happen?

Two ways. Once the Scoping Plan is adopted, the Air Board will spend the next five years writing regulations that make the measures in the Scoping Plan law. For every measure in the Scoping Plan, Air Board staff has to craft detailed regulations, setting thresholds and deadlines, defining who does what and who has to spend money to comply. This is where the real battles will be. The Air Board has worked so damn hard, full speed ahead for two whole years to get the general outlines worked out. This gives them the ability to work even harder the next few years, turning those outlines into specific regulations that everyone will hate.

The other intriguing way that the Air Board will reduce carbon emissions is that they are setting up a cap-and-trade system. Do I need to tell you what that is? Just in case. A cap and trade system means that you set a cap, a fixed amount, on all the carbon (or greenhouse gas) emissions in the state. That’s the ‘cap’ part. There is a pool of allowable carbon emissions, and if you are a refinery who wants to emit carbon, you better own some of that pool. You can buy a piece of that pool from the Air Board; they will sell it to you at auction. Or, you could buy some of the right to emit carbon from your buddy, who also bought some at the auction. You could buy it from a stranger. That’s the trade part.

Then you could think to yourself. Self, is it cheaper for me to fix my smokestack so that I don’t emit as much carbon or is it cheaper for me to buy the right to emit more carbon? Or, you might think, I bought a lot of the right to emit carbon at that auction. But if I fixed my smokestack, I could sell some of that ability to emit, recoup the money it cost me to fix my smokestack and MAKE BIG MONEY. Economists (and real people too) think that a cap-and-trade system finds the most cost-efficient way to get from the emissions we have now to the emissions level set by the cap. It may still cost money (or be profitable, depending on how much wasting costs now), but market theory says that all those people making individual decisions about buying and selling emissions rights versus improving their factories is the cheapest way to achieve the emissions reduction.

In the next five years, the Air Board will implement the Scoping Plan, forcing carbon emissions reductions through regulation and through cap-and-trade.  (The cap-and-trade system won’t just be for California.  California is doing it with seven other western states and western Canada.)  In five years, another version of Scoping Plan is due, one that sets the next level of winching down emissions.

So that’s the story for today. The Air Board is about to adopt the AB 32 Scoping Plan. Now you know what that means.

*People call the California Air Resources Board the Air Board, or Aye-Are-Bee, or CARB, one word, interchangeably.