Three new comment letters on California climate policy

Yesterday Michael Wara and I submitted a pair of comment letters to CARB regarding its proposal to extend the cap-and-trade system beyond 2020. We split our comments into a letter that addresses CARB's legal authority to develop this regulation and a set of substantive policy considerations regarding the proposal's details. Unfortunately, our view is that CARB likely lacks the necessary authority to act because the authorizing statute (AB 32) only provides this authority through 2020. On the policy side, CARB has also made a number of assumptions regarding the stringency of the post-2020 caps that may frustrate California's ability to reach its 2030 target by placing an overly aggressive share of the burden on difficult to regulate "uncapped" sectors. CARB will discuss its proposal at a Board Meeting this Thursday in Sacramento. 

Today I finished up a related comment letter to the California Independent System Operator (CAISO). CAISO is proposing to expand its wholesale electricity market to include some of California's neighbors. The proposal implicitly assumes that California maintain a post-2020 price on carbon, without which a wholesale market cannot distinguish between high- and low-GHG resources. Because the future of California's approach to carbon pricing is very much up in the air at the moment, I revisit the concerns expressed in the legal comment letter Michael and I sent to CARB. My comment letter to CAISO also addresses the need for additional detail on the precise market design details since the legal and net GHG implications of CAISO regionalization will depend on these parameters. 

Let's just say it's been a busy week in state climate policy.