On Thursday, the California Air Resources Board (CARB) unanimously approved a scoping plan for its ambitious initiative to reduce greenhouse gas emissions in the state.  The scoping plan, mandated by the Global Warming Solutions Act of 2006 (AB 32), aims to reduce statewide emissions to 1990 levels by 2020.  The scoping plan includes both an extensive cap-and-trade program as well as sector-specific emission reduction targets. 

While the plan is in many ways similar to an earlier draft released in June, it does strengthen California’s commitment to significant - transitioning eventually to full - auctioning of carbon credits.  By comparison, the Western Climate Initiative (WCI), a partnership of seven western states, including California, and four Canadian provinces, has only committed to auctioning 25% of its carbon credits by 2020.

The proposed cap-and-trade program covers 85% of the state’s emissions and will be linked to the WCI.  The cap-and-trade program will begin in 2012 and phase in particular sectors of the state’s economy.  In the first compliance period, the electricity sector and large industrial facilities will be covered by the program.  Additional sectors will be phased in to the cap-and-trade by 2015.

The scoping plan is a starting point by which CARB will begin a formal rulemaking process implementing the scoping plan’s recommended measures.  The rulemaking will develop key elements of the cap-and-trade, including determining the method used for distributing emissions allowances, appropriating revenues raised through auctions, and establishing the rules for the use of emissions offsets.

Additional key components of the scoping plan include strategies to enhance and expand proven cost-saving energy efficiency programs; implementation of low-carbon fuel and clean car standards; and increased uses of clean and renewable energies.  The plan proposes full deployment of the California Solar Initiative, high-speed rail, water-related energy efficiency measures and regulations to reduce emissions from trucks and from ships docked in California ports, as well as measures designed to safely reduce or recover refrigerants and other industrial gases.

CARB adopted the scoping plan even though the Legislative Analyst’s Office (LAO), a non-partisan research group, criticized the economic analysis underlying the plan, finding that the analysis was so flawed as to make it impossible to use.  In the background of the plan’s release is a deepening budget crisis in California, as the state is forecasting a $41.8 billion budget deficit through 2010.  While CARB’s own analysis predicts that its initiative will lead to energy efficiency savings, job growth, and substantial investments in green technology, LAO’s criticisms have left the Board defending its predictions.

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