California’s cap-and-trade program is an important part of the overall effort to reduce greenhouse gas emissions to 1990 levels by 2020. The cap went into operation in 2012 with compliance required in 2013. So far, the program has generated close to a billion dollars in annual auction revenue from regulated sources that need to buy allowances to emit greenhouse gases. The cap is phasing in over time, and so far only large, industrial-type emitters and utilities are included.
That will change on January 1, 2015, when transportation fuel providers come under the cap. Or I should say “if” they come under the cap. The oil and gas industry is launching a big campaign to keep that from happening. They already won this two-year reprieve from the launch. At stake is a huge amount of auction revenue and a relatively small increase in gas prices that would spur innovation for more fuel-efficient vehicles.
Perhaps seeing the writing on the wall, State Senator Darrell Steinberg earlier this year proposed a preemptive retreat by removing fuels from the cap and creating a carbon tax as compensation. Environmentalists shot that proposal down, but they may now have a tough time keeping fuels under the cap. If they fail, they will be left with nothing, making Steinberg’s proposal seem like a missed opportunity.
Billionaire climate-fighter Tom Steyer is pledging to spend what it takes to keep fuels under the cap, according to the Los Angeles Times. Let’s hope he and the environmental community have success. Otherwise it will be a lot harder for California to meet its climate goals and encourage the technological innovation we need to wean ourselves off polluting fossil fuels in favor of cheaper, clean energy.
Energy efficiency upgrades and renewable energy arrays for homes and businesses pay for themselves over time through savings on the utility bill. But the big obstacle for many is finding the upfront cash. PACE (Property Assessed Clean Energy) programs overcame that barrier by allowing local governments to pay for this work and have property owners repay them via additional assessments on their property tax bills. Big win-win: communities get more energy efficient and clean energy neighborhoods, limiting pollution and creating good local jobs, while homeowners get access to low-interest financing.
But the federal agency that underwrites over half of the mortgages in the U.S. freaked out in 2010 over the program. The Federal Housing Finance Agency (FHFA) put a stop to its rapid growth across the United States by telling property owners that they might jeopardize their mortgage if they take out a PACE lien. Basically the FHFA didn’t like the idea of local governments having lien priority on these payments in the event of a foreclosure, despite the numerous protections and safeguards included in the program. Since then, some PACE programs have continued, notably in Sonoma County and Riverside. California even created a statewide loan-loss reserve to protect federal interests, but it didn’t satisfy the feds.
Greentech Media now has a hopeful article on how PACE programs are rebounding from the federal hysteria:
It’s not illegal for homeowners backed by Fannie or Freddie to participate in the program. They are simply required to pay off the loan first if they move or refinance their mortgage. That may deter some homeowners from considering a PACE loan, but a lot of them are still making the decision to finance a retrofit through PACE.
Stacey Lawson, the CEO of Ygrene, another large PACE administrator, said in a previous interview that it all comes down to communicating the implications of taking on the loan: “There’s been a lot of fear, uncertainty and misinformation in the marketplace around the risk to homeowners. But it’s really just a simple business decision they have to make.”
Turns our PACE program administrators and homeowners are forging on, undeterred by the federal threats. This is good news for the climate fight and for the economy. And once the federal government reverses its stance (we can hope), the program should proliferate and become a top source for financing clean energy building improvements.
I just returned from a road trip through the Pacific Northwest, including Oregon (Cascades, Willamette Valley and Portland) and Washington (Seattle and the San Juan Islands). So of course I’m now an expert on the environmental trends there, as seen from the window of my car and my conversations with friends and strangers there. Based on this purely anecdotal evidence, I’ve compiled my list of top five environmental trends in the Pacific Northwest.
5) Farm-to-Fork: Lots of great agriculture in the Northwest, and they take advantage of it. Much of the food we ate on our trip, whether purchased at farmers markets, restaurants, or eaten at friends’ houses, came from hyper-local sources. At one cafe in the San Juan islands, all food was either grown at the farm on-site or traded/purchased from other local farms, including a nearby brewery.
4) Rail Transit: Portland and Seattle are undergoing a light rail construction boom. Seattle just recently began theirs, and we saw new tracks going in near the downtown, while Portland’s MAX system is extending south of the city. Plus Portland has a cool-looking (although I gather cost-ineffective) gondola tram linking two parts of their hospital complex that are separated by a hill.
3) Renewable Energy: Particularly in Oregon, we saw some innovative renewable energy arrays. Portland State University features the first solar “arch” that I’ve seen (photo right),
Portland’s solar arch
while another building in downtown had cool-looking wind turbines up top (photo left).
Nice wind turbines
Bonus points for its energy efficient ventilation system through windows that can open to the street (remarkably unusual in most skyscrapers).
2) Infill Development: Portland and Seattle featured cranes galore on multistory apartment buildings near their downtowns. Seattle’s trendy Eastlake neighborhood and Portland’s Pearl District stood out to me for construction in these transit-friendly neighborhoods. One negative: Seattle’s Safeco Field baseball park has failed to stimulate much development in the otherwise industrial area south of downtown. I can only assume it’s a failure of planning and financing, but maybe it’s just not a great area for homes and businesses given the industrial activities going on.
1) Electric Vehicles: while California is still the leader here, Oregon features great signage for EV charging stations along the highway (see photo on the right).
Example of highway EV signage
Washington State also seemed to have a good presence of EVs on the road. We even saw a Tesla Model S on Orcas Island in the San Juans (an hour ferry ride from the mainland) with California plates! If that car wasn’t shipped there, then that’s a real coup for Tesla’s supercharger network along I-5.
Overall, it’s great to see other West Coast states making such progress on environmental and energy needs. One area of improvement: Washington State should definitely improve its tailpipe regulations — cars and trucks there are quite smelly and polluting. And of course we need both states to join California’s cap-and-trade market. But I’m confident that in the long run, the West Coast will help lead the country in smart policies to clean the environment and build a sustainable economy.
Greenhouse gas emissions from electricity production represent almost one-third of the total emissions from the United States. Today the Obama Administration finally used its authority under the Clean Air Act (required by a 2007 Supreme Court decision) to regulate this pollution. The Environmental Protection Agency set a proposed goal of reducing greenhouse gas emissions from the electricity sector by 30% from 2005 levels by 2030. States will have significant leeway to meet these goals, including setting up cap-and-trade programs and using energy efficiency and natural gas to switch from coal.
I’m glad the president finally decided to take this step after Congress failed to pass a comprehensive federal approach and “cap-and-trade” and “climate change” suddenly became dirty words. Business groups and conservatives are already panning the proposed rules, but in fact they’ve already extracted significant concessions.
The biggest concession is that the baseline year is 2005. As a result, ta-da! We’re already halfway to the 2030 goal, because emissions fell 15% from 2005 to 2012. So we’re really talking about a 17% reduction. It’s not nothing but it’s unlikely to create the kind of reductions we need to avert the worst impacts of climate change, according to what scientists tell us. In addition, the rules will benefit from the retirement of many coal-fired power plants in the coming decades that were reaching the end of their useful lives anyway. They will likely be replaced by natural gas plants, due to falling natural gas prices and separate, stringent Clean Air Act regulations on new coal-fired plants. This process would have happened even without EPA action on carbon.
The economic impact is also negligible. The Chamber of Commerce predicted a doom-and-gloom scenario of $50B lost to the economy from these regulations by 2030. Of course, the Chamber is always wrong with these predictions. And as economist Paul Krugman pointed out, even if the Chamber is right, that’s only 0.2% of GDP in a $21.5T economy.
I wish Obama had used his Clean Air Act Authority more aggressively and much sooner, but better late and weak than never and nothing. It’s also important to lay the groundwork for future improvements to the system. For example, once state cap-and-trade programs are up and running under these rules, state leaders may incorporate additional greenhouse gas sources under the caps, possibly leading to a national program based on state-by-state groundwork and experimentation. And if it looks like we’re well on our way to meeting the 2030 targets sooner than expected, perhaps there will be political momentum to tighten the screws a bit more on the targets. Finally, the rules give the United States a tiny bit more credibility with other countries on climate change action when we sit down at the UN climate change conference in Paris late next year.
So overall, the new rules are a positive and long overdue step. Let’s hope they portend future action, both at the state and federal levels. Because by themselves, they’re not enough to get the job done.
Yes, federal cap-and-trade legislation went down to defeat in 2010, along with most of Obama’s progressive agenda. The once-Republican idea instead morphed into a political kill phrase for the right-wing, which they successfully branded as both taxation and regulation in one big ball of awful. But as Politico points out, cap-and-trade is actually alive and well at the state level, and it could be poised for expansion with EPA’s coming rule to reduce greenhouse gases from coal-fired power plants. California launched — and will be expanding — its program to reduce greenhouse gases, while nine northeastern states take part in the Regional Greenhouse Gas Initiative (RGGI) trading program. As Politico notes:
Those ranks could grow because of EPA’s upcoming climate regulation, which is expected to give states wide latitude in how they reduce the greenhouse gas pollution from existing power plants.
If EPA, as expected, allows states to develop cap-and-trade programs to reduce carbon from their coal-fired power plant sector, then many states may begin setting up trading platforms that could go a long way to detoxifying the political attitude about cap-and-trade. And once the political opposition melts with the realization that the economy won’t crash with emissions credit trading, it will be politically and structurally easier to incorporate more sources under the cap. Eventually, with a strong network of states using cap-and-trade to minimize greenhouse gas emissions, the federal government may even find it politically safe to develop a national trading platform, with the state markets as a foundation.
Back in 2009, I opposed the cap-and-trade program developed in the federal Waxman-Markey bill because I thought it gave away too much to industry, while undercutting both California’s and EPA’s more promising efforts. While I’m disappointed the US didn’t act faster and better on climate change at the national scale, I’m hopeful that this state-by-state approach, prompted in part by long-overdue EPA action, and unfettered by the industry giveaways we saw at the federal level, will have a better chance of delivering sound policy and actual carbon reductions.
My colleague and faculty director, Dan Farber, described in an op-ed on CNN.com the multiple ways that we can clean our air, from the local to state to federal levels. Dan gives a nice shout-out to my book Railtown, using it to show how Los Angeles could implement more low-cost solutions to get residents to use transit over driving.
In addition to more public transit, Dan highlights electric vehicles, clean fleets such as cabs, and EPA regulation of power plants as necessary steps to make our air cleaner and improve public health and the climate as a result.
This past Friday in Sacramento, the Office of California Governor Jerry Brown convened a few hundred electric vehicle experts for an update on California’s progress deploying EVs. The attendees were mostly from California, including utility representatives, advocates, researchers, and officials. However, experts also came from places ranging from Oregon to the Netherlands. Some informational highlights from the conversation:
- The Netherlands recently reached a major milestone: 25% of their new car sales were electric vehicles. Part of the appeal: the Netherlands waived the sales tax on EVs and has invested heavily in charging stations. Maybe a good lesson for California as EV rebate money runs out? Waiving the sales tax on EVs, if it could pass the Legislature, would be a great incentive for purchase.
- Most Nissan LEAF, Chevy Volt, and Toyota Plug-In Prius customers were motivated by the environmental benefits and fuel savings. Tesla customers, however, were primarily motivated by vehicle performance and access to new technology. Survey results found here (collected by the entity that sends out vehicle rebates, which is a great source of market data like these).
- Most electric vehicle customers skew to the older, whiter, more highly educated, and male demographic.
- HOV (carpool) lane access was an “extremely or a very important purchase motivation” for 59% of EV customers. This bodes poorly for California as the state is running out of carpool lane stickers to distribute — like in a matter of months. The Governor’s Office vowed to make addressing this need a priority.
- California sales of EVs currently represent one-third of the national market, with 64,649 sold to date. The sales graph is definitely looking like a hockey stick, which is an incredible advance for the technology.
- An electric utility rep says that sales of California’s low carbon fuel credits could mean $200 a year back in the pockets of EV drivers. The low carbon fuel standard is part of California’s efforts to reduce greenhouse gas emissions to 1990 levels by 2020, and it requires fuel refiners to either limit the carbon content of their fuel or purchase credits on the open market. Since electric utilities are providing low-carbon fuel (electricity) to their EV customers, the utilities get to sell the credit to oil companies and then return the money to the EV drivers. And if the utility is saying $200 a year, it’s probably more like $500 a year, which is basically free charging at home for most EV drivers.
- Atlanta is the number 2 market in the US for Nissan LEAFs, due to HOV access and other state incentives in a congested urban area. San Francisco is #1 and Honolulu is #6 (and it could rise to the top in terms of percent of EVs sold each year). Even Nashville clocked in at #9. I like see red state cities showing up on this list. EVs should be a bipartisan priority.
Ultimately, the Friday convening was a success in terms of sharing the latest information, providing participants with a chance to influence state priorities on EVs, and giving people in the field a motivational boost. The state is doing incredibly well in terms of EV adoption, as the hockey stick sales graph and anecdotal observations can attest. Look for the key near-term priorities to be an extension of the HOV sticker program and making that low carbon fuel standard rebate happen quickly.
Full speed ahead, California EV drivers and those who will soon be one!
Now that the two states that just legalized marijuana sent their football teams to the Superbowl this year, it’s clear that the stars are aligning for legalizing marijuana nationwide. Sure, legalizing marijuana makes fiscal, moral, and practical sense, but what about the benefits to the environment? Well, it turns out that even the fight against climate change could potentially be enhanced by making cannabis — and the grow operations that produce it — legal.
It starts with the grow sites. Regular Legal Planet readers may recall co-blogger Rick Frank writing about the local hazards and pollution caused by illegal grow operations on public lands. But there’s another, potentially broader environmental issue at stake with legalizing and mainstreaming grow operations: enabling the improved collection of energy data to help target energy conservation and efficiency programs.
Energy data are critical to the fight against climate change and other harmful forms of air pollution. Policy makers, especially here in California (as represented by Ken Alex, Legal Planet guest blogger and senior advisor to Governor Jerry Brown), would like to get a better sense of where the most energy is being used. If they could access energy data by neighborhoods, industry, and time of use, among other categories, policy makers could target the most inefficient customers with incentives and rates to become more efficient. Reducing this electricity usage would have major benefits in terms of reducing air pollution (including greenhouse gas emissions) from power plants and saving ratepayers money from the avoided construction of new plants. Not to mention that the customers themselves would benefit from paying for less electricity.
So what is standing in the way of giving policy makers access to the vital data? Privacy concerns. Even though the energy data are anonymized and aggregated, a vocal segment of ratepayers doesn’t like even the remote possibility that the government could use these data to know when you’re home, when you leave for work, or how your business operates.
Overall, most people have little to hide when it comes to electricity usage. But indoor marijuana growers sure do, and they are quietly constituting a major force in opposition to greater disclosure of energy data. And they have reason for concern. In documented cases, police have issued subpoenas for electricity data to bust pot growers. This is not a small industry either: a 2012 study by Evan Mills of the Lawrence Berkeley National Laboratory (the Lab was not involved in his work) indicated that these grow operations could be responsible for up to 2% of nationwide household electricity usage, at a total cost of $6 billion (in fact, the growers themselves may be our first target for implementing improved efficiency measures, given their potentially wasteful, unregulated ways).
So it’s not a stretch to think that legalizing marijuana nationwide, and allowing commercial grow operations to proceed in a regulated fashion, could have the additional benefit of defusing some of the major privacy objections to releasing environmentally beneficial energy data. Of course, the privacy objections aren’t just limited to marijuana growers, and even with legalization, some residential growers may still want or need to remain anonymous. But sensible marijuana policies could make a major difference in alleviating privacy concerns, unlocking the data that can lead to sound and strategic energy efficiency programs.
Sounds like a result everyone should be high on.
Here is my Sunday Sacramento Bee op-ed on renewable energy policies that California should adopt to reduce greenhouse gas emissions.
