CARB’s Nichols: Elections Have Consequences for Climate Change

The topic I was assigned is  ‘Elections Have Consequences’. Yes Elections do have consequences, but I would argue that those aren’t exactly what we think them to be.

I want to talk a little about California’s elections, not to analyze exactly how we ended up with the majority like we did in the Legislature, or exactly why the people of California decided to go on and pass an initiative measure to tax themselves, which they did in the face of all the conventional opposition. I do want to say, however, that if you are interested in climate change policy and what it means for investment opportunities, then you are actually in the right place; and that is here, in the State of California.  

A couple of weeks ago when the governor gave the State of State address, he spoke about Climate Change in a way, I think, that epitomizes what the program has been used to address and overcome. And what he said was, “When we think about California’s future, no long term liability presents as great a danger to our well-being as the build-up of carbon dioxide and other greenhouse gases in the atmosphere. California is extremely vulnerable—this is a different kind of challenge than we have ever faced. It requires acting now, even the worst consequences are perhaps decades in the future. Again, California is leading the way.”

There are some interesting things about that statement. First, it is scientifically true. Also, because of our long coastline, our dependence on the Sierra snow-pack for our water supply, the long distances over which we transport energy, we are simply so dependent on our climate as the thing that brings people here and keeps people here. California is being made vulnerable to climate change, and that is one of the reasons why we have been willing and able to address it, to treat it as another form of pollution, not that different in many ways, although much different in scale, than we have dealt with before.

I also think it’s an interesting illustration of how our government looks at these issues.  He may not be our governor when all these consequences come to pass, as they are building to in 2030’s, 40’s and 50’s; but he has helped.  

I want to talk a little bit about what we are actually doing about Climate Change in the state of California.  I was thrilled there was an article in TIME magazine just the other day, that talked about how climate is back, “Obama talks about Climate Change. California is acting on it.” So here are some of the things we are doing. I think they make sense for us environmentally and economically, and all the benefits that go along with them.

It starts, of course, with transportation which has been the core of California’s program for fighting air pollution for many decades—all the way back with the LA County Board of Supervisors, with the late Supervisor Kenneth Hahn, who began corresponding with the oil companies, and said their products were simply too dangerous, and they needed to do something about it. Since that time we have moved on in many different ways, from regulating to creating incentives for more advanced, clean-powered vehicles. Now they are more efficient and less-polluting, and still plenty cool and attractive and  every major car company in the world has located some of their design, research or clean-tech work here in Southern California.

Most recently, my board adopted a package of regulations called the Advanced Clean Cars program, which sets us on a path to slash air pollution by another 20 percent, but also to increase Average Fuel Economy to 55mpg by 2025. The amazing thing is these cars are being built that can get those kinds of levels without straining or pushing hybrid or zero-emission type technology.

Getting us to that 55mpg standard is going to save California drivers $5 billion in operating costs by 2025, and $10 billion in 2030 when more of these advanced cars are  on the road. By 2025 this program alone will have reduced greenhouse gases by 52 million tones, or the equivalent of taking 10 million cars off the road for a year. All of this builds on legislation that began in 2004, which we had to go to court to get, but in the spirit of ‘Elections Have Consequences’, we were able to really put this program into high gear as a result of electing President Obama.  

We are also requiring by 2025 that one out of every seven cars be a zero emission vehicle, meaning full battery electric or hydrogen fuel cell power. This mandate has already pushed the development of the cleanest cars here in California. We are rapidly being known as the world center for the cleanest cars. After less than a decade, Tesla Motors, which builds its cars in the Bay Area, received one of most coveted awards in the automotive world when its Model S was chosen as Motor Trend’s 2013 “Car of the Year”.  

You can’t have the cars without a way of fueling them. To make sure we have the infrastructure to charge electric cars we are working closely with the auto-manufacturers, local governments, utilities and research institutions to move forward with a broad-based program to bring on the kinds of charging infrastructure needed for the new vehicles.  The Plug-in Vehicle Collaborative, with Senator Kehoe as our director, is already moving forward with steps to accelerate the installation of charging facilities in the workplace and other challenging venues, including multi-unit residences and apartment buildings.  

The third and critical piece of this transportation puzzle has to do with including local, regional state support in the planning process. California’s pioneering law, SB 375, is already setting into place new plans for sustainable development from San Diego to Los Angeles and the Central Valley. These plans focus on bringing life to urban centers and on creating safer and more walkable streets as well as promoting mass transit.  

Now there are many reasons why environmentalists and others care about having transit. As we are counting cars and carbon, we suddenly have a metric for getting people to actually use less of this stuff, and that is helping to drive and improve more sustainable urban planning. 

When it comes to sustainability, we all think immediately about renewable energy.  California has already reached one gigawatt of installed solar energy under the Solar Roofs Initiative since its inception in 2007. We have now reached 20 percent in looking at enough permitted projects to get to the mandate of 33 percent renewable electricity used by customers, well ahead of the 2030 deadline in the legislation. These projects include some of the largest, technologically advanced big solar projects in the world, in addition to all the renewables in the rooftop initiative I mentioned earlier. As one example, the Ivanpah Solar project in the Mojave Desert, currently under construction, will be delivering 377 megawatts using mirrors to focus the power of sun on solar receivers atop power towers.  

We are in the midst of other big programs here in California to help achieve our climate goals. In some ways, the most controversial is the implementation of our low carbon fuel standard, which was designed to require the petroleum industry to stick to a ten percent reduction in the carbon intensity of the fuels they deliver by 2020. The program was designed to be neutral about what the alternatives may be. Companies can comply with this rule by doing everything from bringing in more advanced types of ethanol or biofuels to paying for electric charging stations or hydrogen stations. Already we are seeing one of intended consequences of this people who have technologies and patents, are developing new approaches  are coming to California with their products and programs. However, we reached a point of political impasse with some of the same companies that originally supported the standard and thought the federal government was going to be acting in the imminent future, and who have now turned and tried to get it stopped. We are not inclined to let that happen.

We think there are benefits to this fuel standard in terms of reduced air pollution as well as the economic advantages that come from being at the center for biofuels, hydrogen, electricity, along with some of the other benefits I mentioned earlier, which make it worth staying the course on this program. 

Last and probably the most famous of the programs we have implemented under AB 32 -- the state’s global climate solutions law -- is the cap-and-trade program. This program is one that has taken several years to bring to fruition. It was designed with so a great deal of public i at the many workshops we held.  We had the benefit of the best thinking and technical assistance, of individuals and experts, economists, people who know how to make things work, which is not the core strength of state government;  and we took advantage of all of it. We now have an auction platform; we had our first auction in November, and we are already seeing a vibrant secondary market at work in California carbon allowances. In order to make this work affordably, the companies subject to it are able to achieve compliance through purchasing offsets that are approved through protocols that California has developed. We have approved two registries that oversee those protocols that have already emerged as the global standard. 

The key to this whole program is the idea that we will not bend on accounting standards and that California will be a place where a ton of carbon in an offset project will be measured, and that people around the world will know what it means. This is what makes California a leader, and as California goes, so does the rest of the country and the world.

I was talking to my friend Lisa Jackson at the EPA about what is going to happen next, and I think despite this Congress, we’ll develop ways to incentivize and reward states that have moved forward to devise ways to address climate change, at the federal level under EPA’s authority of the Clean Air Act.

So as Governor Brown put it, “Not for what is conventional, but for what is necessary—necessary to keep faith with our courageous forebears. What we have done together and what we must do in the coming years is big…” 

Well, it is big, and you are going to hear a lot about some of those big things over the course of the next two days. What we are doing is trying to capture synergies in transportation, like waste, like energy at this conference.  I want to thank you for participating actively and I look forward to seeing you here next year.