California Air Board Set To Vote On 2 Crucial Issues

(December 16, 2010)

san-francisco-chronicle

December 16, 2010

The California Air Resources Board is set to vote on two controversial environmental issues at its meeting today and Friday: adoption of the nation's first broad-based cap-and-trade program and the easing of diesel pollution rules.

The cap-and-trade program is the last major element of AB32, the California Global Warming Solutions Act, which puts the state on track to reduce greenhouse gas emissions to 1990 levels by 2020. The act requires that rules to meet that goal be in place by the end of this year.

The cap-and-trade regulation, more than 3,000 pages long, would take effect in 2012 and force industry to eliminate 273 million metric tons of carbon dioxide from the air by 2020, largely by requiring the state's biggest polluters to cut their emissions or pay for excessive emissions of the gas that traps heat on Earth.

It has been criticized by many business groups across the state because, they argue, businesses will face increased costs for being in California while those in other states will gain a competitive advantage.

The regulation will apply to some of the state's largest emitters of carbon dioxide: the electricity industry and large industrial plants that manufacture glass, paper, concrete and other products. In 2015, it would expand to fuel distributors, and in all covers 360 businesses that work out of 600 sites across the state.

Derek Walker, the director of the California Climate Initiative for the Environmental Defense Fund, said the regulation will have the dual effect of spurring green-technology innovation and investment in the state as well as serving as a model for combatting climate change that others can follow.

"It's the first time there's going to be a price on pollution and that, from the very beginning, is the goal of climate and energy policy," he said.

Emissions credits

Under cap and trade, each industrial sector will get free credits equal to about 90 percent of the overall average emissions for that sector. Businesses pay for excessive emissions by buying "allowances" - or credits - if they are unable to reduce their carbon dioxide levels.

Those credits would be auctioned for no less than $10 per ton, and any money generated from the electrical industry's purchase of credits must be used to benefit ratepayers, while the Legislature will decide what to do with other proceeds.

The AB32 Implementation Group, a coalition of business groups, manufacturers, oil companies and others, has argued that paying for the allowances, when such regulations do not exist nationwide, punishes California businesses. They have asked the Air Resources Board not to charge for any allowances.

The coalition also believes that giving the Legislature control over the revenue from the sale of allowances amounts to a tax that should require a two-thirds vote of the Legislature to impose.

State Sen. Fran Pavley, D-Agoura Hills (Los Angeles County), who authored AB32 when she was in the Assembly, said she had thought four years ago that the federal government would be taking a lead in combatting climate change. But the federal climate bill died earlier this year, partly because of objections over cap and trade.

Rules for diesel engines

The other major issue the Air Resources Board is scheduled to consider is whether to significantly ease air pollution rules for diesel engines, such as those used in trucks, construction machines and school buses. The rules affect both on- and off-road vehicles.

The amendments to the on-road rules stem from reductions in truck use because of the weak economy, which has lessened the amount of air pollution.

The changes for off-road equipment stemmed from a major miscalculation by air board scientists of pollution emitted from the engines. The estimate of nitrous oxide emissions was overstated by 340 percent, and that miscalculation was the subject of a report by The Chronicle in October.

To fix that, the Air Resources Board will consider delaying the requirements for all fleets of equipment for four years, removing a requirement to retrofit machines, give extra credits for engines that have had early retrofits and expand the definition of "low use" engines.

The air board estimates that doing so reduces overall costs by 72 percent over 20 years.

Still, some of those affected by the regulation said that while they appreciate the delays and changes, they still are concerned that there will be a long-term devastating effect on their businesses.

Robert McClernon, president of the California Dump Truck Owners Association, said many companies in the industry just simply cannot afford to comply.

"We're going to get a couple of extra years and we're grateful, but it's a hell of a notion that the government is going to give us a couple more years to breathe before we die," said McClernon, who owns a fleet of nine trucks in Sacramento. He said the association has offered the air board staff multiple alternatives for reducing pollution, but those have not been substituted for the regulation.

Limiting air pollution

On the other end of the spectrum, public health advocates argue that fighting cancer, asthma and other diseases by limiting air pollution should be the priority.

"The bottom line is we are urging the board to adopt the strongest possible regulation," said Bonnie Holmes-Gen, senior policy director for the American Lung Association of California. That extends to both the on-road and off-road rules, she said.

And while the off-road industry still has serious concerns about future costs, those in the on-road trucking industry are optimistic.

"There's light at the end of the tunnel now," said Matt Schrap, director of environmental affairs for the California Trucking Association. "It's not as gloom and doom as it was before.