U.S. States & Regions

States and regions across the country are adopting climate policies, including the development of regional greenhouse gas reduction markets, the creation of state and local climate action and adaptation plans, and increasing renewable energy generation. Read More

Summary of California’s Cap and Trade Program

This is a summary of California’s Cap and Trade Regulation, as adopted by the California Air Resources Board (CARB) on October 20, 2011. CARB amended these regulations as of September 1, 2012. These changes are not yet reflected in the summary below, but can be found here. The cap and trade program is part of the state of California’s compliance with Assembly Bill 32, the Global Warming Solutions Act of 2006. 





















Citing the authority of the state’s Health and Safety Code, this Article establishes the California Greenhouse Gas Cap-and-Trade Program which aims to reduce greenhouse gas (GHG) emissions by establishing an aggregate GHG allowance budget for covered entities and providing a trading mechanism for compliance instruments.  This subarticle provides definitions for terms in this Article.

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The Program applies to the six major GHGs and also to nitrogen trifluoride (NF3) and “other fluorinated” GHGs (defined in the Definitions Section).  The Program applies to the following sources in the state whose annual emissions equal or exceed 25,000 metric tons of GHGs as measured in the equivalent amount of carbon dioxide (“CO2e”):

  • production facilities (cement, cogeneration,  glass, hydrogen, iron and steel, , lime manufacturing, nitric acid, petroleum and natural gas systems, petroleum  refining, pulp and paper manufacturing, self-generation of electricity, and stationary combustion);
  • electricity generating facilities and importers;
  • suppliers of natural gas (utilities, distributors and suppliers of blended fuels that contain natural gas);
  • suppliers of RBOB (reformulated gasoline blendstock for oxygenate blending) and distillate fuel oil  (position holders and importers) and suppliers of blended fuels that contain these;
  • suppliers of liquefied petroleum gas (refiners, etc.) and suppliers of blended fuels that contain this fuel; and
  • suppliers of carbon dioxide.

These covered sources have a compliance obligation for every metric ton of CO2e emitted from their associated activities that generate a compliance obligation, which differs for each covered source (see §95852), such as fuel combustion, process emissions, etc.  The first compliance period—for entities whose annual emissions equaled or exceeded 25,000 metric tons CO2e in any year from 2008-2011—begins January 1, 2013.  The second compliance period—for entities whose annual emissions equaled or exceeded 25,000 metric tons CO2e in any year from 2011-2014—begins January 1, 2015.  The compliance obligation remains in place until GHG emissions fall to less than 25,000 metric tons of CO2e per year during one full compliance period, or if the entity shuts down.  GHG emissions must be reported and verified under the Air Resources Board’s (ARB’s) Regulation for the Mandatory Reporting of Greenhouse Gas Emissions. 

This subarticle allows for voluntary participation in the Program by entities engaged in the above-listed activities but falling below the annual 25,000 metric tons CO2e threshold.

This subarticle also allows for other market participants to participate.  Non-covered entities, including those operating a registered offset project, may apply to purchase, hold, sell, or voluntarily retire allowances under the Program.   Verification bodies, offset registries or early action offset programs as identified in subarticle 14 do not qualify to hold allowances but may qualify as a “registered participant.”

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The Executive Officer must create California GHG allowances and assign each allowance a unique serial number.  Each allowance represents limited authorization to emit up to one metric ton in CO2e of any GHGs.  The allowance does not constitute property or a property right.  The Executive Officer may issue and register offset credits, provided that all provisions set forth in subarticle 13 are met.

Entities may use various instruments (such as allowances, offset credits, sector-based credits, as described in this rule) to comply with this section of the law.

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Only a registered entity or an entity registered with an approved external program (pursuant to subarticles 12 or 14) can hold a compliance instrument.  To register, an entity must complete an application.  The application must designate a single authorized account representative and a single alternate authorized account representative.  The accounts administrator may deny an application based on information provided or if the accounts administrator determines the applicant has provided false or misleading information, or withheld information.

An entity that meets or exceeds the inclusion threshold must register with the account administrator within 30 calendar days of the reporting deadline in the ARB’s Mandatory Reporting of GHG Emissions (MRR) if the entity is not covered as of January 1, 2013; or by January 31, 2012 or within 30 calendar days of the effective date of this regulation, whichever is later, for an entity that exceeds the inclusion thresholds for any data year 2008 to 2011.

This subarticle also describes the different account types used for compliance and by the Executive Officer.  Each entity can have at most one holding account, one limited use holding account, one  compliance account or one exchange clearing holding account.  When the Executive Officer approves a registration for a covered entity, an opt-in covered entity, or a voluntarily associated entity, the accounts administrator will create a holding account for the registrant.  When a covered entity or an opt-in covered entity completes the registration process, the account administrator will create a compliance account for the entity, into which the entity may transfer compliance instruments at any time.  A limited use holding account with transfer restrictions will be created for an entity that qualifies for a direct allocation. An exchange clearing holding account with transfer restrictions will be created for a voluntarily associated entity. The Executive Officer may remove compliance instruments from a compliance account to satisfy a compliance obligation.  The accounts administrator will also create accounts under the control of the Executive Officer, including: an Allocation Holding Account, used to hold the allowances when they are created; an Auction Holding Account, into which allowances are transferred from holding accounts of entities for which allowances are being auctioned; a Retirement Account, to which the Executive Officer or other entities transfer compliance instruments from compliance accounts that are to be retired; an Allowance Price Containment Reserve Account, into which serial numbers of allowances allocated to this application will be transferred and from which the Executive Officer will authorize sales at allowance reserve sales; and a Forest Buffer Account, into which ARB will place ARB offsets credits generated from a forest offset project, which will be used in the case of unintentional project reversals.

This subarticle also describes the selection and responsibilities of a single authorized account representative and a single alternate for each account.

This subarticle also requires registered entities to disclose direct and indirect corporate associations with other registered entities.  Beneficial holding relationships between registered entities must also be disclosed.

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The first compliance period is from January 1, 2013 to December 31, 2014.  The second compliance period is from January 1, 2015 to December 31, 2017.  The third compliance period is from January 1, 2018 to December 31, 2020.

At the start of the first compliance period, in 2013, the annual total allowance budget is 162.8 million CA GHG allowances.  In 2014, the last year of the first compliance period, the annual allowance budget decreases to 159.7 million CA GHG allowances (1.9% decrease).  In 2015, the first year of the second compliance period, allocations start at 394.5 million CA GHG allowances and decrease to 370.4 million CA GHG allowances (6.11% decrease) at the end of the three-year period.  The allowance budget increases from the first to second compliance period because the program covers a larger number of entities starting in the second compliance period (See Subarticle 7).  In the first year of the third compliance period, allocations start at 358.3 millions of CA GHG allowances and decrease to 334.2 million CA GHG allowances (6.73% decrease) at the end of the period.

Renewable electricity that is used in California but does not count towards Renewable Portfolio Standard compliance can result in retired CA GHG allowances.

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Covered entities are subject to the Mandatory Reporting Regulation and to record retention requirements.

This subarticle sets forth the phase-in of coverage of different types of covered entities.  Operators of facilities (i.e., industrial facilities like cement and glass producers), first deliverers of electricity (which are electricity generating facilities in California or electricity importers), and suppliers of CO2 who exceed the annual emissions thresholds described in Subarticle 3 are covered beginning with the first compliance period.  Suppliers of natural gas, suppliers of RBOB and distillate fuel oils, suppliers of natural gas liquids, and suppliers of blended fuels who exceed the emissions thresholds above are covered beginning with the second compliance period.

Operators of facilities have a compliance obligation for every metric ton of CO2e for both stationary combustion and process emissions.

First deliverers of electricity must hold allowances to cover both in-state stationary emissions and emissions associated with electricity imported into California from a jurisdiction without an approved, linked GHG emissions trading system.

Natural gas suppliers have a compliance obligation for all GHG emissions that would result from combustion of all fuel delivered to end users in California, save for fuel delivered to covered entities.

Suppliers of gasoline “blendstock” – RBOB and distillate fuel oils – have a compliance obligation for all GHG emissions that would result from combustion of all such fuels that are imported or delivered to California.

Suppliers of natural gas liquids have a compliance obligation for the GHG emissions that would result from full combustion of all fuel consumed in California.

Suppliers of carbon dioxide have an aggregated compliance obligation for every metric ton of CO2 supplied for use in California and imported, less any CO2 that is verifiably sequestered. 

CO2 emissions from specified source categories count toward reporting thresholds but do not count toward an entity’s compliance obligation.  These include: verifiable biomass-derived fuels such as agricultural crops or waste, wood and wood wastes; biodiesel; fuel ethanol; biogenic municipal solid waste; biomethane; specified fugitive and process emissions; and emissions from geothermal generating units and geothermal facilities. 

A covered entity that exceeds the relevant emissions thresholds in any of the three years preceding the start of a compliance period is a covered entity for the entire compliance period.  Entities that first exceed the emissions threshold during an ongoing compliance period have a compliance obligation for all of their annual emissions in the first year that they exceed the threshold and each year thereafter.

Covered entities are limited in the number of offset credits that they may surrender to meet their compliance obligations.  The ratio of offset credits used for compliance by a covered entity to the covered entity’s total compliance obligation (i.e., all of its covered emissions) must be less than 0.08.   Moreover, sector-based offset credits cannot account for a ratio over 0.25 of the quantitative usage limit on compliance instruments in the first compliance and second compliance period and 0.50 of the quantitative usage limit on compliance instruments in subsequent compliance periods.

Covered entities have an annual compliance obligation equal to thirty percent of their GHG emissions from the previous year.  Submission of allowances pursuant to the annual compliance obligation for a given year is due November 1 of the following calendar year (depending on a covered entity’s deadline under the reporting program).  Surrender of allowances pursuant to a covered entity’s triennial compliance obligation is due by November 1st of the calendar year following the third year of the compliance period.

Surrendered allowances must be from an allowance budget year that is from the same year, the previous compliance year, or the last year of a compliance period for which a triennial compliance obligation is calculated. 

A covered entity that fails to surrender sufficient allowances pursuant to its compliance obligation must surrender allowances to cover four times its “excess emissions” (i.e., the difference between the entity’s compliance obligation and the number of allowances and or offsets surrendered on time by the entity).  At least three-fourths of the compliance obligation for untimely surrender must come from CA GHG allowances or allowances issued by a GHG ETS.  Up to one-fourth can be fulfilled by ARB offset credits or other compliance instruments.  The untimely enforcement surrender is due within five days of the first auction or reserve sale conducted by ARB following the applicable surrender date. If covered entities fail to surrender such allowances, enforcement actions will be undertaken.  Three-fourths of the compliance instruments used to fulfill the untimely surrender obligation will be transferred to the Auction Holding Account, while the remaining one-fourth will be deposited in the Retirement Account.

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This subarticle specifies how the allowances under the cap shall be allocated.

The Allowance Price Containment Reserve will be allocated as follows:

  • One percent of the allowances from budget years 2013-2014,
  • Four percent of the allowances from budget years 2015-2017, and
  • Seven percent of the allowances from budget years 2018-2020

Ten percent of the allowances from budget years 2015-2020 will be allocated to the Auction Holding Account on December 15, 2011 for future auctions.  Auction proceeds from will be deposited into the Air Pollution Control fund and will be available upon appropriation by the Legislature for designated purposes.

Allowances are freely allocated to electrical distribution utilities.  Electrical distribution utilities receive 97.7 million allowances in 2012 with the annual cap adjustment factor  declining by roughly 2 percent per year each year thereafter.  The Executive Officer will place an annual individual allocation in the limited use holding account of each eligible distribution utility on or before January 15 of each calendar year.

Allowances are also freely allocated to covered industrial sources based on the methodology described in Subarticle 9. As the table below shows, industrial sectors are classified according to leakage risk (the risk that industry would locate somewhere other than California to avoid GHG regulations) and assigned different assistance factors.  The higher the assistance factor, the more allowances are directly allocated to covered industrial facilities.

Direct allocations of GHG allowances are specified for covered industrial facilities from the sectors listed in Subarticle 8 and electrical distribution utilities. 

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Direct allocations of GHG allowances are specified for covered industrial facilities from the sectors listed in Subarticle 8 and electrical distribution utilities. 

Direct allocations to covered industrial facilities are based on a product output-based allocation calculation methodology for industrial sectors with benchmarked product outputs (e.g., paper products, refined petroleum products, and steel) and on a thermal energy-based calculation methodology for other industry sectors.  The direct allocation to a covered industrial facility in a given year is a function of the applicable output-based or thermal energy-based benchmark, the facility’s actual output or energy use, the industry sector-specific assistance factor (see table in Subarticle 8), and an adjustment factor that declines over time to reflect the declining cap level.

All direct allocations of allowances to investor-owned electrical distribution utilities are placed into a limited use holding account for each electrical corporation.  Publicly-owned utilities can split their direct allocations of allowances between a limited use holding account and a compliance account with an advance notice to ARB. In 2012, one sixth of the allowances placed in a distribution utility’s holding account must be offered for sale at each of two auctions scheduled for 2012. After 2012, all allowances in a utility’s limited use holding account must be offered for sale at auction each year unless they are for a budget year that is after the current calendar year.  Auction proceeds obtained by an electrical distribution utility shall be used exclusively for the benefit of retail ratepayers of each electrical distribution utility.  Investor owned utilities are required to ensure equal treatment of their customers or customers of electricity providers and community choice aggregators.

A placeholder is included for direct allocations for natural gas distribution utilities.

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In 2012, two auctions of California GHG Allowances will take place on August 15 and November 14. Beginning in 2013, subsequent auctions shall be conducted on the twelfth business day of the second month of each calendar quarter.  The Executive Officer will hold two auctions each quarter – the Auction of Allowances from the Current and Previous Budget Years and the Auction of Allowances from Future Budget Years.  During each quarter’s Auction of Allowances from the Current and Previous Budget Years, one fourth of the allowances allocated for the current calendar’s budget year will be offered.  In 2012, each Auction of Allowances from Future Budget Years will offer half of the allowances designated for the advanced auction from the 2015 budget.   Beginning in 2013, each Auction of Allowances from Future Budget Years will offer a quarter of the advance auction allowances designated for advance auction from the budget year three years subsequent to the current calendar year.  Entities owning limited use holding accounts may consign allowances for sale in the quarterly auctions and accept the auction settlement price for such allowances.

Auctions will consist of a single round of sealed bidding.  Auctions shall include an auction reserve price (i.e., a price floor below which no allowances will be sold).  For 2012 and 2013, the auction reserve price for 2013 vintage allowances will be $10 per metric ton CO2e.  For calendar years after 2013, the auction reserve price will equal the previous calendar year’s auction reserve price plus an increase of  an annual rate of 5 percent plus inflation.  The auction reserve price for 2012 auctions of vintage 2015 allowances will be $10 per metric ton CO2e.

For auctions conducted in 2012-2014, a single entity with a compliance obligation or a group of such entities with a corporate association (see below for definition of corporate association) can purchase no more than 15 percent of the total allowances offered in any given auction.  Any other single auction participant is limited to purchasing no more than 4 percent of total allowances in any given auction.  These limits do not apply, though, to investor-owned electrical utilities.

This subarticle also includes provisions governing auction administration and registration.  In particular, California allowances may be offered through an auction conducted jointly with other jurisdictions to which California links, provided the joint auction conforms to this subarticle’s requirements.

This subarticle governs the operation of the Allowance Price Containment Reserve.  Only covered entities, including opt-in covered entities, can purchase allowances from the Allowance Price Containment Reserve.  The first reserve sale will be conducted on March 8, 2013.  Subsequent sales shall be conducted six weeks after each quarterly allowance auction.  All allowances in the reserve shall be offered for sale at each such reserve sale.  These allowances shall be divided into three equal-sized tiers with varied pricing.  In 2013, the reserve allowance prices shall be: $40 per allowance for the first tier; $45 per allowance for the second tier; and $50 per allowance for the third tier.  After 2013, these prices shall increase each year at an annual rate of 5 percent plus inflation.

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This subarticle regulates the practices involved in trading and banking of allowances. 

It establishes the maximum number of allowances held by any entity in a calendar year, called the “holding limit.” The holding limited is calculated as follows:

                Holding Limit = 0.1*Base + 0.025*(Annual Allowance Budget – Base)

·         “Base” equals 25 million metric tons of CO2e

·         “Annual Allowance Budget” is the number of allowances issued for the current budget year

Limited exemption from the holding limit is allowed for allowances transferred to a compliance account for a year, up to the amount of emissions reported in the previous year.  The limited exemption is the sum of all previous annual transfer limits, will be reduced by the sum of the entity’s emissions over a compliance period on December 31, and will be assigned by the Board according to set requirements if a positive or qualified positive verification statement is not made. 

The Executive Officer may not approve transactions that would exceed an entity’s holding limit.  Holding limits of entities with corporate associations will be treated as those held by a single entity unless they are prohibited by law from coordinated market activity including transfer of instruments.  If an entity is found in violation of the provisions of this subarticle, the Executive Officer may also limit the number of instruments held by an entity to an amount sufficient to cover its reported emissions, subject an entity to additional annual surrender requirements, and suspend or revoke registration of entities.

This subarticle sets the requirements of trades acceptable to the accounts administrator.  The administrator must have the following information before a transaction settlement is completed: the account number and representative of the seller and purchaser, the serial number of the instrument, the transaction date, the settlement date, the price, and the account number and representative of whom the instrument is to be held in benefit.

It also establishes that allowances for a current or previous compliance period may be banked, while allowances for a future period may also be held.  Allowances do not expire until they are surrendered to and retired by the Executive Officer, are voluntarily retired, or are retired by an external trading system linked to the California system.

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This subarticle allows compliance instruments from approved external (i.e., outside of California) greenhouse gas emissions trading systems to be used to meet the requirements of this program.  Approval of external systems may be given by the Board after public notice and comment in accordance with California Administrative Procedure Act.  Allowances issued by external systems are not subject to the quantitative offset usage limits in this Article, but external offset and sector-based offset credits are subject to the quantitative use limits when used to meet a compliance obligation under this Article.

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Offsets must be GHG reductions or removals that are “real, additional, quantifiable, verifiable, permanent and enforceable.”  The Board shall provide public notice of and opportunity for public comment prior to approving any Compliance Offset Protocols. 

This subarticle describes the requirements for Compliance Offset Protocols.  To be approved by the Board, a Protocol must: establish data collection and monitoring procedures that are relevant to the offset project type; establish a “conservative” business-as-usual baseline; account for leakage through activity-shifting and market-shifting; account for quantification uncertainty; ensure GHG reduction permanence; include a mechanism ensuring sequestration permanence; and establish the length of the crediting period.  The details for achieving each of these delineated requirements is left for the Protocol to address and the Board to ensure are upheld. The crediting period for a non-sequestration project can be no less than 7 years and no greater than 10 years while a sequestration project crediting period must be no less than 10 years and no greater than 30 years.  In addition to complying with an approved Compliance Offset Protocol, an offset project must also be located in the United States, Canada or Mexico. 

This subarticle also describes the details for registering an offset project for listing.  The project operator (or their “designee”) must be registered with ARB and must not be subject to a hold restriction on their account.  They must also attest to ARB as to the truthfulness and completeness of the project submission as well as acknowledge that they are voluntarily entering the Cap-and-Trade program complete with the accordant regulatory requirements.  The project listing must contain all of the information required for that project type based on the appropriate Protocol (once developed).  There are four Compliance Offset Protocols: Ozone Depleting Substance Projects, Livestock Projects, Urban Forest Projects, and U.S. Forest Projects.  If the project listing is incomplete in that context, the ARB (or the registry being used) must notify the operator or designee within 30 days.  If the project list is complete the listing status is changed to “Proposed Project” pending approval for listing by the registry.  Projects rejected by the registry may be appealed to the ARB (who, in turn, may consult with the registry in making a final determination).  

This subarticle describes requirements for verification of GHG emissions reductions or GHG removals from offset projects.  An offset project operator must obtain the services of an ARB-accredited verification body for the purposes of verifying projects.  Verification for offset projects other than sequestration must be done annually while the verification for sequestration projects must be done once every six years.  To perform verification services, a given project cannot be verified by the same service provider for more than six years in a row (for any project type).  A service provider must be at least three years removed from verifying a particular project before reengaging with that same project again.  This subarticle also contains detailed information on procedures that verification service providers must follow, as well as the procedures to be employed to ensure that there exists no conflict of interest that could compromise the independence of the verification service provider.

A registry offset credit, representing one metric ton of CO2e, will be issued only if the project is listed pursuant to the requirements in this subarticle, the emission reductions or GHG removal enhancements were issued a Positive Offset or Qualified Positive Offset Verification Statement, and ARB (or the registry being used) has received this statement from an ARB-accredited verification body.  ARB (or the registry being used) will issue an offset credit no later than 45 days after a Positive Offset or Qualified Positive Offset Verification Statement is received.  ARB or the registry must notify the Offset Project Operator of the issuance within 15 days of issuing the credit.  If offset credits originate from an offset project submitted through an Offset Project Registry, this Registry must retire the original credits issued in its system before ARB issues a compliance offset credit for the same amount retired by the Registry.  ARB will only issue compliance offset credits for a project submitted through a Registry after reviewing the project related documentation and ensuring all regulatory criteria have been met for compliance offset credits.For forest sequestration projects, a portion (the amount to be determined in the Compliance Offset Protocol for U.S. Forest Projects) of the offset credits issued must be placed into the Forest Buffer Account.  If ARB determines that there has been an unintentional reversal it will retire offset credits in the amount of tons reversed from the Forest Buffer Account.  If an unintentional reversal lowers the project’s actual standing live carbon stocks below its project baseline, the project will be terminated by ARB or an Offset Project Registry.  Another project may be initiated within the same boundary.  If an unintentional reversal does not lower the project’s actual standing live stocks below its baseline, the project may continue without termination as long as the unintentional reversal has been compensated by the Forest Buffer Account.  If an intentional reversal occurs, the Project Operator shall give notice in writing to ARB and the Offset Project Registry and provide a written description of the intentional reversal within 30 days of the reversal.  The Project Operator must submit ARB offset credits or other approved compliance instruments in the amount of CO2e reversed within six months of notification by ARB , and new offset projects may not be initiated within the same boundary. 

Offset Project Registries can apply to provide registry services under this article.  Their primary business must be operating an Offset Project Registry for voluntary or regulatory purposes.  They may not act as an Offset Project Operator, Authorized Project Designee, or offset project consultant, or act as a verification body once approved as an Offset Project Registry.  Offset Project Registries shall use Compliance Offset Protocols approved pursuant to this subarticle to determine whether an offset project may be listed with the Offset Project Registry for issuance of registry offset credits.  Any credits issued by a Registry are subject to ARB review before being transitioned into compliance offset credits.  Credits issued by a Registry cannot be used for compliance until ARB reviews all relevant project documentation and determines that the credits meet all regulatory requirements.  The subarticle describes requirements placed on Offset Project Registries for reporting  and verifying GHG emissions reduction projects.

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This subarticle describes the requirements placed on offset credits used for early action.  Offset credits from projects registered with an approved third-party offset program (according to the procedures outlined in Subarticle 13 for Offset Project Registries) or from a program that meets a list of requirements described in this subarticle shall be accepted by ARB for early action use.  The requirements placed on early action offset credits specify that the GHG reductions: must have occurred between January 1, 2005 and December 31, 2014; must result from an early action offset project that is listed or registered with an Early Action Offset Program prior to January 1, 2014, must result from a project located in the United States, and must result from the use of one of the approved offset quantification methodologies.

Once an offset credit that is issued by an approved third-party offset program is determined by ARB to meet the criteria in this subarticle, ARB will assign an ARB serial number to the offset credit.  When ARB retires a credit, it will notify the third-party program to simultaneously retire it.  An ARB offset credit may not be issued for an early action offset credit that has been retired, cancelled, or used to meet a voluntary commitment, or surrender obligation in any voluntary or regulatory system.

Any offset credits issued by an approved third-party program must be verified by an ARB-accredited verification body.

ARB may consider for acceptance compliance instruments issued from sector-based offset crediting programs that meet requirements in this subarticle and originate from developing countries or subnational jurisdictions within those developing countries.  Sector-based offset credits may be generated from Reducing Emissions from Deforestation and Forest Degradation (REDD) and other sources as yet to be defined. 

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The relevant legal jurisdiction is the State of California, including the authority of ARB and the Superior Courts of the State of California.  The ARB Executive Officer may suspend, revoke, or place restrictions on account holders who are found to be in violation of this Article.  Violation of this Article can include failure to surrender a sufficient number of allowances to meet the compliance obligation, and penalties may be assessed pursuant to Health and Safety Code section 42403(b).

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This subarticle provides for severability and confidentiality.  Emissions data submitted to the ARB is public information, but reporting entities can request that material be classified as confidential based on the entity’s belief that the information is either trade secret or otherwise exempt from public disclosure under the California Public Record Act.

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Rising Oil Prices: It’s About More Than What You Pay At The Pump

For many Americans, U.S. oil dependence has become a concern for reasons ranging from climate change and environmental protection to national security and the economic impact of higher gas prices. But there are other important impacts of our oil dependence, including how foreign oil contributes to the U.S. trade deficit and how rising oil prices decrease American jobs – both particularly salient issues on the current U.S. political agenda.  

A recent article from Daily Finance shines light on the 2010 trade deficit, more than half of which is from petroleum-related products. In 2010, the U.S. petroleum-related trade deficit was $256.9B, which represents a 29.6 percent jump from the 2009 petroleum trade deficit. This rise is largely due to increased prices, as the consumption of petroleum-related products in the United States grew by only 1.9 percent from 2009 to 2010 while the price per barrel of oil grew 31.1 percent to $74.66. An issue currently receiving a lot of attention in Washington, the $61B worth of cuts to the national budget sought by the U.S. House of Representatives, is equal to only one fourth of the country’s 2010 petroleum-related trade deficit.

Numbers that large can be hard to put into perspective, so let’s look at how this affects the average American. The graph below shows the U.S. petroleum-related trade deficit per capita (left axis), which is closely related to oil prices (right axis). In 2010 the petroleum-related trade deficit per capita was $832 and has ranged from $600 to $1200 in the past several years. This translates into each American household sending roughly $2,155 out of the U.S. economy in 2010 to pay for oil.



Rising oil prices not only increase the trade deficit, they decrease the number of jobs in America. As energy prices rise, businesses and consumers must spend more on energy and thus have less to spend elsewhere. In his presentation at our recent conference on state and federal roles in climate policy, Mark Doms, Chief Economist at the Department of Commerce, explained that when the price of oil goes up by just $10 per barrel, it translates into a loss of tens of thousands of jobs per month, or up to a quarter of a million U.S. jobs per year. Instead of losing jobs in order to maintain our use of oil, we should focus on creating jobs by investing in domestically produced alternative fuels and vehicles. 

In June 2008, oil prices spiked to $145 per barrel, and Americans paid for it at the pump as gas prices reached $4 per gallon. We could be headed into a similar situation, as oil prices rose above $105 per barrel earlier this month and are expected to continue to rise in 2011 and 2012. Because we rely on oil, a resource that is concentrated in the Organization of the Petroleum Exporting Countries or OPEC, we face oil prices that are much higher than a competitive market would yield. This makes U.S. gasoline susceptible to price shocks, and American consumers pay more at the pump than they would in a competitive market.

Here we have highlighted two other important reasons why Americans should care about rising oil prices: they increase the U.S. trade deficit and can decrease domestic jobs. As oil prices continue to rise, these negative economic trends will also worsen. In order to mitigate the impacts of rising oil prices, we need to work towards a clean energy economy and promote the use of domestic alternative fuels and energy efficiency. This would decrease our oil dependence, making the United States less susceptible to rising oil prices while also creating more jobs here at home.

Monica Ralston is is the Innovative Solutions intern

Minimizing the Costs of Extreme Weather

To see the economic costs of extreme weather you don’t have to look all the way to Russia where last summer’s heat wave caused extensive wildfires and crop losses roiled world markets for wheat.   Nor do you have to look as far as Europe where in the summer of 2003, a 1-in-500 year heat wave caused at least 35,000 premature deaths.  No, extreme weather events have recently occurred within the United States. In Cedar Rapids, Iowa, extensive flooding in the region in 2008 caused damage estimates of $8-10 billion. In Nashville, Tennessee, in May 2010, a 1-in-1000 year storm caused floods resulting in more than $3 billion in damage.  

Whether you think these are just isolated incidents or are part of the emerging pattern of climate change, there is one thing we can all agree on. These events result in significant economic loss and to the extent we can build greater resilience into our economy to minimize losses from extreme weather, we will all be better off.

Women Leadership in Climate Change Action

Q&A with Eileen Claussen

Originally published by Australian Centre for Leadership for Women as part of an expert panel on climate change, Empowering Women to Lead the Way in Climate Change Action


What are the main drivers for you in believing in climate change and taking action?

The issue of climate change is not about belief but science. The scientific community has reached a strong consensus regarding the science of global climate change.  The overwhelming majority of climate scientists believe the warming of the earth is unequivocal. This warming is largely the result of emissions of carbon dioxide and other greenhouse gases from human activities, including industrial processes, fossil fuel combustion, and changes in land use, such as deforestation. Enough is known about the science and environmental impacts of climate change for us to take actions now to address its consequences. In the words of the U.S. National Academy of Sciences 2010 report to Congress: “It is unequivocal that the climate is changing, and it is very likely that this is predominantly caused by the increasing human interference with the atmosphere. These changes will transform the environmental conditions on Earth unless counter-measures are taken.”


Can you explain how the cap and trade emissions trading program operates and why do you advocate this program over the emissions tax option?

A cap-and-trade system is one of a variety of policy tools that exists to reduce the greenhouse gas emissions responsible for climate change. I believe it is the best tool because it offers environmental certainty (a cap) and economic flexibility (ability to reduce emissions in places where it’s most cost-effective). Once established, a well-designed cap-and-trade market is relatively easy to implement, can achieve emissions reductions goals in a cost-effective manner, and drives low-greenhouse gas innovation.

The key difference between a tax and the cap-and-trade approach comes down to the issue of certainty and environmental benefit. A tax provides cost certainty; the cost is fixed because of the tax. Cap and trade, on the other hand, provides environmental certainty because of the cap. With a carbon tax, many emitters will reduce their emissions rather than pay the tax.

In more detail … In a cap-and-trade program, the government determines which facilities or emissions are covered by the program and sets an overall emission target, or “cap,” for covered entities (firms held responsible for emissions). This cap is the sum of all allowed emissions from all included facilities. Once the cap has been set and covered entities specified, tradable emissions allowances (rights to emit) are distributed (either auctioned or freely allocated, or some combination of these). Each allowance authorizes the release of a specified amount of greenhouse gas emissions, generally one ton of carbon dioxide equivalent (CO2e). The total number of allowances is equivalent to the overall emissions cap (e.g., if a cap of one million tons of emissions is set, one million one-ton allowances will be issued). Allowance trading occurs because firms face different costs for reducing emissions. For some emitters, implementing new, low-emitting technologies may be relatively inexpensive. Those firms will either buy fewer allowances or sell their surplus allowances to firms that face higher emission control costs.


I understand that the Pew Center has produced 85 peer-reviewed reports on climate change in an effort to demystify the subject for members of Congress and interested companies. Can you point out what has been the focus of this effort in relation to what exactly the Center has aimed to demystify and how do you regard the outcomes of this effort in leading the Pew Center on Climate Change?

As a non-profit, non-partisan and independent organization, the PewCenteron Global Change does its best to provide credible information, straight answers, and innovative solutions to addressing climate change. One of the Center’s goals is to demystify a wide range of topics that are critical to the issue of climate change, from the science and impacts, to the economics, to policies, and solutions. Our goal is to provide the best information - in an understandable way - so that policy makers and stakeholders can make informed decisions.

More than any other area, I believe our greatest impact has and continues to be engaging the business community on climate and clean energy policy and solutions. When the PewCenterbegan in 1998, only a handful of brave firms were willing to address the issue. Now our Business Environmental Leadership Council (BELC), which started with 13 companies in 1998, includes 46 mostly Fortune 500 corporations committed to advancing effective and mandatory climate action. In stark contrast to 13 years ago, all of these firms have a good understanding of the issue and have been active in the policy debate.

While a great deal of work remains to be done, I firmly believe the U.S. climate debate is much further along because of the vocal leadership of many progressive businesses. These business leaders understand the significant opportunity for economic growth in a clean energy future. But unleashing the investments necessary to capitalize on these opportunities requires the certainty that can only come with government policy. And that is an effort we continue to work toward with forward-thinking members of the business community. 


What do you see as some of the best practice solutions which US businesses have put in place to tackle climate change problems?

Energy efficiency is one key area where businesses are taking action that delivers tangible environmental benefits and saves substantial amounts of money in the process. A comprehensive PewCenterstudy released in April 2010 found that leading companies that give greater attention to energy efficiency have realized billions of dollars in savings and millions of tons of avoided greenhouse gas emissions. The report, From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, documents leading-edge energy efficiency strategies, describes best practices, and provides guidance and resources for other businesses seeking to reduce energy use in their internal operations, supply chains, and products and services. We are now involved in an assessment of how companies do clean energy innovation, and hope that this analysis and the report we will issue will also be of great value to those in the business sector.

Through our employee-engagement program – Make An Impact– we also know there is a large appetite among employees to learn about constructive solutions to reduce energy use that saves money and helps the climate. By arming their employees with tools to address our climate-energy challenges, companies find great benefits in employee morale and performance.


With recent studies showing that the media in the U.S. continues to indicate that climate change science is contentious or does not have any consensus, how do you in your role deal with this environmental skepticism?

The attacks on climate science – mostly dishonest claims driven by ideology and profit – have proven highly effective at misleading the public and souring its support for climate action. Other factors like the down economy make advancing climate policy an uphill battle, but the well-orchestrated, well-funded campaign to discredit climate science is an influential barrier to progress.

To help overcome this obstacle, the PewCentereducates diverse audiences, including business leaders, policy makers, and the public about the strong, clear science behind climate change. Scientists may disagree on some details, like individual weather events, but they have an astonishing level of consensus on the basics:  The planet is warming and human activities are primarily responsible for the warming that has occurred since the mid-20th century.

While we believe the science is indisputable, we know that others do not. So it’s critical to frame the issue in different ways for different audiences while advancing the ultimate goal of reducing greenhouse gas emissions. Talking in terms of energy security or economic opportunities in clean energy are two examples that resonate with people who are not swayed by the science. As President Obama has said: There’s more than one way to skin a cat.

Discussing climate action in terms managing risk is another way to reach audiences that question climate science. This approach is often used by national security experts, and it forces people to consider the level of risk they are willing to live with and steps they can take to minimize that risk. Risk management is a formal version of choices that families regularly make when buying insurance, deciding where to live, or investing in retirement accounts. It’s an approach that offers a way forward on the complicated and highly politicized issue of climate change. And our knowledge of climate impacts, while not perfect, is much stronger than evidence security experts rely on to make decisions regarding highly sensitive topics such as nuclear proliferation or the actions of rogue states.    


How can communication about the risks and opportunities of climate change be improved to effect change and action?

To generate greater support for action, the public needs a clearer understanding of the impacts likely to become more common in a warming world. The reality is that talk of global average temperatures does not reach people; we need to make the impacts more tangible. I believe this starts with telling compelling stories about impacts occurring in people’s own backyards. From garden club members to city planners, people are being forced to address climate impacts. Their stories, and the connection to changes in our climate, need to be more clearly communicated to broader audiences.

The PewCenteralso uses extreme weather events as a teaching tool to educate the public about our vulnerabilities to climate change. The fact is that we need to take action now, or we are simply loading the dice for more extreme weather events in the future. We will see more events such as the unprecedented seasonal flooding in Australia, the 2010 Russian heat wave and flooding in Pakistan. We will see more extreme winter snow storms that blanketed the U.S. Midwest and Northeast this year. It is imperative that we start to take action now to reduce emissions and adapt to unavoidable climate change.

These impacts translate into the costs of inaction. While opponents of climate policy attack the costs of regulation as a reason for inaction – and surely there are costs – the overwhelming analysis shows that the benefits of action far outweigh the costs. This message needs to be more clearly communicated so the public better understands the benefits of climate action, or conversely, the costs we face by not reducing greenhouse gas emissions.


There have been many reasons put forward as to the failure of the Obama Administration's Climate Change legislation being passed in the Senate in 2010. To what do you attribute this failure?

Passing comprehensive climate and energy legislation through the U.S. Congress was a huge lift under the best of conditions. It required the White House to lay out a legislative roadmap and push its agenda through Congress. The President also needed to use the bully pulpit to help make the case for climate action to voters. Unfortunately, this did not happen.

The poor economy was a major reason that impacted the climate and energy debate in Congress last year. Unemployment was at an all-time high, and Americans were more concerned about creating jobs than anything else. Another issue was the health care debate. Passing that legislation used up a great deal of political capital, and it took time away from addressing other issues, including climate and energy. Climate change also became too politically contentious and there was not the bipartisan support necessary to pass the legislation. 


What do you see as being significant about the Cancun climate change achievements?

The agreement reached in Cancún in December fills in many key missing elements of the 2009 Copenhagen Accord, including a stronger system of support for developing countries and a stronger transparency regime to better assess whether countries are keeping their promises. The Cancún Agreements also mark the first time that all of the world’s major economies have made explicit mitigation pledges under the U.N. Framework Convention on Climate Change.

Of course, the ultimate goal of the continuing international talks must be a comprehensive binding climate treaty. That’s the goal of the journey we started on this issue way back in 1992 at the Earth Summit in Rio. But in Cancún we saw countries agreeing on incremental steps that will deliver stronger action in the near term and, we hope, will keep the world on course toward someday agreeing to binding commitments.

Q&A with Eileen Claussen -- Published by Australian Centre for Leadership for Women

Updated Climate Change 101 Series Released

Kicking off the new year, we released an update of its Climate Change 101 series. Climate Change 101: Understanding and Responding to Global Climate Change is made up of brief reports on climate science and impacts; adaptation measures; technological and business solutions; and international, U.S Federal, State, and local action. Last released in January of 2009, the updated reports highlight the significance of the global negotiations, climate-related national security risks, local efforts to address climate change, the most recent predictions on global temperature changes, and more.

Updated Website, Climate Change 101 Series Deliver Credible Information to Advance Climate Action

Press Release
March 3, 2011

Contact: Rebecca Matulka, 703-516-4146


Pew Center Updates Website and Climate Change 101 Series

WASHINGTON, DC – Public opinion continues to be divided on climate change and its causes, and as a result, public access to credible, digestible information about climate change is more critical than ever. To help advance a constructive dialogue that leads to climate action, the Pew Center on Global Climate Change refreshed its website and updated its landmark Climate Change 101 report series.

“Now more than ever, the public needs straight answers about climate change,” said Eileen Claussen, President of the Pew Center on Global Climate Change. “The Pew Center is continuing its work to demystify the issue, and our updated website and report series present straightforward and useful climate change information.”

With a fresh new design and easy-to-navigate organization, the Pew Center’s website provides access to the center’s first-rate analyses and publications of key climate issues. One new website feature is the publications library, which allows users to search for and order free copies of Pew Center reports. The website puts the Center’s Climate Compass blog front and center, and presents timely ideas and insights from science and policy experts on topics critical to the climate debate.

The fast-reading Climate Change 101: Understanding and Responding to Global Climate Change includes nine brief reports and helps inform the climate dialogue by providing a reliable and understandable introduction to global climate change. The updated reports highlight the significance of the global negotiations, climate-related national security risks, local efforts to address climate change, the most recent predictions on global temperature changes, and more.

For more information about global climate change and the activities of the Pew Center, visit www.c2es.org.

# # #

The Pew Center on Global Climate Change was established in May 1998 as a non-profit, non-partisan, and independent organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.

Speech: The 2011 Climate-Energy Policy Landscape

Opening Keynote by Eileen Claussen, President of the Pew Center on Global Climate Change
tate-Federal Workshop on Climate and Energy Policy: Where Do We Go From Here?
Hosted by the Pew Center and the Georgetown Climate Center
Washington, DC
February 24, 2011

I want to welcome all of you to our 2011 workshop on state and federal climate and energy policy. The Pew Center on Global Climate Change is delighted to be working with the Georgetown Climate Center – and two of our favorite alumni in Vicki Arroyo and Kate Zyla – to present what we hope will be a very engaging and informative program over the next two days.

You know we established the Pew Center in 1998 as a nonpartisan, independent organization to provide credible information and help spur innovative solutions to climate change. For those of us who have been working on this issue for so many years now – and I am certainly not the only one in the room about whom this is true – right now could be a very discouraging time indeed. President Obama did not even utter the words “climate change” in his State of the Union address in January. In contrast, in his 2010 address he was effusive in praising the U.S. House of Representatives for passing a comprehensive energy and climate bill.

We have traveled a difficult road on this issue over the past year … a road jammed by partisan fighting over health care and the legislation on financial reform … and a road torn up by the poor state of the U.S. economy. It’s been hard to move forward in these conditions.  Then in November, congressional elections brought a whole new group of climate change deniers and doubters to the halls of Congress.

Any time you have someone winning election to the Senate thanks in part to an ad where he uses a rifle to shoot a hole through cap-and-trade legislation, well … I guess you could be forgiven for feeling a little bit down and out.

But I am not here to give you a woe-is-me address. Well – not an entirely woeful address.  And the reason why I won’t do that, and the reason why none of us should accept the argument that it’s impossible at the moment to move anywhere on this issue, is because the stakes are simply too high.

Before I get into the meat of my remarks though I know the Academy Awards will be broadcast in a few days and I was looking at the list of films that are nominated this year, and I noticed that a lot of these films have something in common. A lot of them tell stories about people overcoming seemingly insurmountable odds to succeed.  And I thought they actually hold lessons for those of us working on climate change and energy issues.

  • For example, there is The King’s Speech … the story of King George the Sixth overcoming a debilitating stammer so he can unite his people to enter World War II.  The moral for the climate fight: It takes hard work and determination to communicate in ways that mobilize people. And for those of you who have seen the movie, there is also this: when you’re feeling really down, unleashing a string of profanities can be excellent therapy.
  • Another Oscar contender is the film The Fighter, about boxer Mickey Ward and his half brother, Dickie … and Mickey’s unlikely road to the world boxing title with Dickie’s help.  The lesson: don’t ever count yourself out. And, if you’re a parent, please think twice before giving your children rhyming names.   
  • Of course, there is also True Grit … about a young girl’s venture into hostile Indian Territory to find the man who killed her father. The lesson for those of us pushing for climate action: stay the course, and follow your journey to its end. And, if by any chance you’re staffing up for this work, don’t overlook the gruff, hard-drinking, one-eyed man in the cowboy hat who dropped his resume off the other day. He might be able to help you out.

So maybe there is something in the culture right now. Maybe we need these stories about people taking on big things, overcoming big challenges in their lives. And maybe those of us working on the climate change issue should take note. We may feel unlucky from time to time, but we cannot let it get in the way of our work to help shape solutions to the climate challenge facing this country and the world.  The simple fact is that the evidence of climate change continues to pile up in front of us. We ignore it at our peril.

2010 tied 2005 as the warmest year on record. Nine of the 10 warmest years have happened since 2001. Last year, Russia faced the worst heat wave and droughts in its documented history. Unprecedented flooding in Pakistan left 2 million people homeless and millions more requiring emergency aid. There was also unprecedented seasonal flooding in Australia.  And nearly all of the Northern Hemisphere was dealing with a massive heat wave last summer.

Each of these events, every one of them, is consistent with what scientists say we should expect in a warming world.

Even the record cold and snowfalls that much of the United States has been dealing with this winter can be seen as a glimpse of what we’re in for as atmospheric greenhouse gases increase and the climate becomes more unstable. It simply defies common sense to ignore the link between man-made climate change and these numerous extreme weather events. I am not saying climate change caused these particular storms and bitter cold, but this is exactly the kind of thing scientists say we should expect more of in the years to come. Add to that the declining sea ice in the Arctic, receding and disappearing glaciers, and the many other signs of irreversible change, and it’s hard not to feel that we are loading the dice. I have three young grandchildren, another is on the way. And it is hard not to wonder about the world they will grow up in.

What kind of world will it be?  To what extent will their generation have to pay for the things we didn’t do today? 

This is what’s at stake. And this is why we need to persist in our work on these issues. Over the next two days, we will be talking about many important topics, from transportation and land use to adaptation to what it will take to build a clean-energy economy here in the United States and around the world. We will also be talking about the varying yet complementary roles of the state and federal governments in addressing these issues.

I want to use my remarks here this morning to share what I believe is a realistic outlook of the challenges we face and draw your attention to a few small signs of hope. Because while the politics can look bleak, there are a few indications that action on this issue might still be possible in the months and years ahead.

The first positive sign I want to point out is the commitment of this White House to clean energy as a priority for the United States. In his State of the Union address, the President set a goal for the nation: to get 80 percent of our electricity from clean energy sources by 2035. He may not have used the words “climate change” in making this proposal, but the implication for the climate is clear.

The White House knows full well that public support for renewables and other alternative energy sources remains strong. A recent Gallup poll found that more than 80 percent of voters favor clean energy legislation … although voter support does drop, sometimes below 50 percent, when people are asked to consider the costs of shifting to cleaner sources of energy, however manageable those costs might be. 

Adopting a clean energy standard would obviously be a big deal and a significant step forward. But is it politically possible?  My guess is no – not right now.  Not to say that there isn’t real interest in a CES – but realistically, the chances of such an initiative passing the Senate are very small – and probably zero for getting through the House.  Still – it’s useful to set a goal – and start the conversation. 

This takes me back to the lesson from The King’s Speech that I mentioned: It takes hard work and determination to communicate in ways that mobilize people.  Even in the face of considerable opposition, those of us who believe in the need for action on this issue must continue our efforts to connect with the public. We must continue to make our case. And we must continue to connect our cause to other related causes for which there is considerable public support.

This is why we should all be pleased that the White House has placed clean energy issues front and center as it continues to develop its “Win the Future” innovation agenda for the nation. As the Obama administration very rightly points out, China leads the world right now in clean energy investment, and we have a lot of work to do just to keep up, let alone overtake China as the world’s clean energy leader.

And the White House’s commitment on these issues is not all talk; it’s not all about photo opps and messaging.  One unmistakable sign that the Obama administration wants to see real action on climate and energy issues comes from the Environmental Protection Agency. 

Remember the message from The Fighter? Don’t count yourself out. Well, EPA is making an effort to stay in the fight despite some very long odds, and some very tough opponents in the opposite corner of the ring. 

Even as he talked about reducing “unnecessary” government regulations in his State of the Union address, the President made a point of saying that he – quote – “will not hesitate to create or enforce common-sense safeguards to protect the American people.”  This was an obvious shot across the bow to those members of Congress who have stated their interest in depriving EPA of the ability to regulate carbon dioxide emissions.

Let’s be clear here.  The Supreme Court in 2007 decided that greenhouse gases meet the definition of pollutants under the Clean Air Act. The Court left it to EPA to decide if emissions of these gases presented a risk to public health and welfare. And EPA decided they did, based on overwhelming scientific evidence underlying the risks of climate change. It’s not just the Obama EPA that feels this way. We recently learned that the previous EPA Administrator under President George W. Bush came to exactly the same conclusion … and other senior Bush administration officials agreed.

In fact, EPA’s recent actions on this issue aren’t all that different than the step-by-step plan spelled out by the agency under President Bush, a plan that was described at the time by the Administration as “prudent and cautious yet forward thinking.” Today’s actions are largely the same, and yet they’ve come under attack by a vocal contingent in Congress. 

What regulatory road is EPA headed down? The initial rules requiring mandatory reporting of emissions, substantially improved fuel economy for cars and vans, and best available control technology for large new and modified sources are a good start. Later this year, EPA is expected to propose additional stationary source controls, with a focus on the electric power and oil refinery sectors. And even in these cases, EPA’s actions are extraordinarily modest.

And so they may be pulling some punches, but the fact remains that EPA is staying in the fight. Of course, opponents of these and other reasonable EPA actions will continue to raise a ruckus, and there have already been loud cries in Congress to take away the agency’s regulatory authority and cut its funding. Indeed, the budget bill passed by the House of Representatives last week would repeal EPA’s authority to regulate greenhouse gases from stationary sources, although it leaves regulations of automobiles intact. 

The House budget also proposes major cuts in climate-related programs at EPA and other agencies. EPA funding was reduced 30% overall, including the Global Change program, with even larger cuts to the greenhouse gas reporting program. NOAA’s Climate Service program was zeroed out as well. Among the many Energy Department programs with reduced funding, Energy Efficiency and Renewable Energy face a 40 percent cut. And for a high-profile hit, funding for the Assistant to the President for Energy and Climate Change, recently held by Carol Browner, was eliminated. Looking internationally, nearly all funding for U.S. commitments under the UNFCCC process was slated for elimination, including funding for the IPCC and the U.S. Special Envoy for Climate Change.

It’s not a pretty picture, and I cannot honestly tell you how it will be resolved.  Certainly there will be cuts, certainly there will be policy riders to appropriations bills, and certainly there will be attempts to legislate away EPA authorities directly.  But those seeking these changes will not have an easy ride, and I would guess that many of these attempts will fail.     

So – sticking with the ‘fighter’ theme – on the budget front, we’re probably only in round 2 or 3 of a 12 round match.

More positive signs come from the world of business.

As all of you know, the White House right now is making a very deliberate effort to build business support for its policies. The President’s recent address to the U.S. Chamber of Commerce was just one part of this effort. It came, you will recall, shortly after he appointed Jeffrey Immelt of GE to head the President’s Council on Jobs and Competitiveness. GE and its CEO have been leaders in the American business community on the issue of building a clean-energy economy, so the Immelt appointment makes sense. And it’s a reminder to the American public that there is considerable support among U.S. business leaders for reasonable action to promote clean energy industries and jobs, reduce U.S. dependence on foreign oil – and, incidentally, reduce U.S. emissions of greenhouse gases, too.

There remains great interest in the business community in clear and certain U.S. energy policy. “Certainty.”  You hear the word again and again today in conversations with business leaders. Dow CEO Andrew Liveris was on NPR last month and in simple, eloquent terms he stated that businesses need to know the regulatory rules of the road to have a better idea of what types of investments will pay off down the line. He clearly articulated the need for government to engage proactively with business to create public-private partnerships to spur innovation and create jobs in clean energy and other sectors.

So this idea that all of business is some scary villain standing in the way of action on these issues is inaccurate.  In fact, the business world appears to be taking a lesson from the third film I mentioned, True Grit.  Many of these companies started on their journey years ago to reduce emissions, increase efficiency, and pursue business opportunities in the clean energy sector. And they aren’t about to be dissuaded from staying on the trail.  It may be tough sometimes, and the political winds may be blowing against them at the moment, but they are intent on pursuing this to the end. 

Up to now, my remarks have been mostly Washington-centric, and I apologize. That’s what you get for coming to the nation’s capital to talk about climate change. But, of course, all of the action (or inaction) on this issue does not happen in Washington, and so let’s take a look at the picture at the state level. The news from the state capitals on this issue in recent months has been decidedly mixed. While regional climate initiatives continued to push forward in the past year, the November elections brought to the nation’s statehouses a group of new leaders who adopted strong stands against climate action in their campaigns.  In the State of Montana, a bill was introduced that would overturn the laws of science and nature and simply declare that carbon dioxide does not cause global warming. 

But this is another case where we should remember the story of Mickey The Fighter and not count ourselves out. Because there was an important bright spot in the elections. I am talking about the overwhelming defeat in California of Proposition 23. This measure, as you know, would have suspended a 2006 law intended to reduce the state’s greenhouse gas emissions. Shortly after the vote, the California Air Resources Board formally approved the state’s cap-and-trade program, which is designed to reduce California emissions to 1990 levels by 2020. While further legal challenges are pending, California is still in the fight. And there is strong public support for what the state wants to do.

Yes, Californiawill always provide a more hospitable climate for action on this issue. But the fact that the most highly populated U.S. state will soon be implementing a cap-and-trade system and other measures to reduce emission has to be a positive sign. It is a sign that the issue is not going to quietly disappear into the night. Much of the financial support for the “No on Prop 23” campaign came from the venture capital and tech industries in California. These companies understand the market opportunities that clean energy and energy efficiency provide, and despite the millions of out-of-state dollars poured into the Prop 23 campaign, they were willing to invest in making those opportunities real.

And, of course, California is not alone among the states in advancing serious measures that reduce emissions. Here at this workshop over the next two days, we will all learn more about what’s happening on this issue in states across the country.

For instance, Maryland has new energy laws to increase renewable energy production and create more incentives to purchase electric vehicles, which are especially well-suited to the state’s compact land use. And Maine has recently adopted laws to expand energy efficiency and boost clean electricity generation with the aim of preserving the Pine Tree State’s scenic landscape for its many vacationers.

As they have since the dialogue began way back in the 1990s, many U.S. states are taking the initiative, advancing solutions, and providing a learning laboratory for the rest of the country so we can see what works in practice. And that is definitely a positive sign.

The final very small positive sign I want to talk about is what’s happening outside the United States. The agreement reached by international negotiators in Cancún in December fills in many key missing elements of the 2009 Copenhagen Accord, including a stronger system of support for developing countries and a stronger transparency regime to better assess whether countries are keeping their promises. The Cancún Agreements also mark the first time that all of the world’s major economies have made explicit mitigation pledges under the U.N. Framework Convention on Climate Change.

Of course, the ultimate goal of the continuing international talks must be a comprehensive binding climate treaty. That’s the goal of the journey we started on this issue way back in 1992 at the Earth Summit in Rio.  But in Cancún we saw countries agreeing on incremental steps that will deliver stronger action in the near term and keep the world on course toward someday (we hope) agreeing to binding commitments.

So to recap, I see four small but positive signs amid what I acknowledge is a very challenging environment. They are: 1) the White House’s continuing commitment to doing something on this issue in the face of very strong political headwinds, in part through common-sense steps at the EPA; 2) support for reasonable action on energy and climate issues among U.S. business leaders; 3) some progress on these issues in California and other states; and 4) continued progress in the international climate talks.

I don’t want to be a Pollyanna here.  I understand as well as anyone else that all of these small positive signs I have mentioned are positive only when you compare them to all of the negative things that are happening out there today.  We are like all of the leading characters in the movies I have mentioned.  In a very difficult fight.  On a journey in hostile territory with the odds sometimes appearing overwhelmingly stacked against us.  Facing enormous challenges in communicating, getting our message across, getting more people on our side. 

I cannot promise a Hollywood ending to this drama we’re in but I can say this: all is not lost.  And getting to a place where we are confident about the prospects for action on this issue that we all care about so deeply is going to require each and every one of us to recommit ourselves to this fight.  To recommit ourselves to staying the course in our journey.  And to recommit ourselves to communicating in more compelling and more coherent ways about what’s at stake here, and about what we can and must do. 

Think about transportation. With gas prices rising and oil now exceeding $100 a barrel, it’s hard to argue against realistic solutions that can lessen our oil dependence while reducing greenhouse emissions. The Pew Center just last month released a report that showed it’s possible to get to a cleaner, more secure transportation system that could deliver up to a 65-percent reduction in emissions from the sector between now and 2050.

Solutions are out there. We can meet the challenge of building clean energy industries and creating clean energy jobs. We can reduce U.S. and global emissions of greenhouse gases. But we are going to need true grit to get this done.

Thank you very much, and I hope you enjoy the conference. 

Planning for our future

This blog post was co-authored by Deron Lovaas of the Natural Resources Defense Council and is also posted on NRDC's blog Switchboard.


If you were a resident of Washington, D.C., in 2000 and still live in the District today, you may have noticed the number of cars in the city has dropped significantly. Between 2000 and 2008, the population of D.C. grew 3 percent (more than 18,000), while the number of registered automobiles dropped almost 8 percent (nearly 19,000 cars and light trucks). A recent Center for Clean Air Policy (CCAP) report highlighted one of the reasons for this shift in how we get around: more and more people now prefer to live in walkable communities.

Barack Obama's EPA hit for what George W. Bush's EPA wanted

February 15, 2011

By Eileen Claussen

This op-ed first appeared in Politico


A vocal contingent in the House is now attacking the current Environmental Protection Agency administrator for the very thing her predecessor in the Bush administration wanted to do.

EPA Administrator Stephen Johnson wrote a letter to President George W. Bush laying out the legal and scientific rationale for regulating greenhouse gases under the Clean Air Act. Johnson explained steps that the EPA would take to begin to do so.

Johnson’s letter surfaced last week at the House Energy and Power subcommittee hearing on proposed legislation to strip EPA’s authority to regulate greenhouse gas emissions.

Remarkably, it proved that Bush’s EPA administrator had reached the same conclusions and planned almost identical actions to what the current EPA administrator, Lisa Jackson, has begun implementing.

What exactly does Johnson tell Bush? He insists that the EPA must respond to the Supreme Court’s 2007 decision in Massachusetts v. EPA with a finding that greenhouse gases represent a risk to public health or welfare. This is EPA’s “endangerment finding,” which would be overturned by legislation now being proposed in the House.

Johnson also noted, “the latest climate change science does not permit a negative finding, nor does it permit a credible finding that we need to wait for more research.”

What is most telling is that Johnson states that a positive endangerment finding was “agreed to at the Cabinet-level meeting.” Apparently senior Bush administration officials agreed that climate change poses a risk to our nation’s public health and welfare.

Johnson describes his plan as “prudent and cautious yet forward thinking,” and says it “creates a framework for responsible, cost-effective and practical actions.” Sound familiar?

Jackson, in her statement at the hearing last week, called EPA’s actions a “reasonable approach,” one that “will reflect careful consideration of costs and will incorporate compliance flexibility.”

Indeed, the step-by-step plan of action spelled out by Johnson could be a checklist for the EPA’s recent actions — largely the same actions being aggressively attacked today by some in Congress.

These actions include the endangerment finding; a joint rule-making with the Transportation Department to require more fuel-efficient cars; rules to modify the agency’s requirements for new sources to reduce the number of facilities that would be covered (EPA’s tailoring rule), and proposals to respond to specific petitions (EPA has acted on ones for the utility and oil refinery sectors).

Given these striking similarities, attacks on current EPA actions — that the agency is “an instrument of job destruction” and would “put the American economy in a straitjacket” — now resonate as particularly empty political rhetoric.

How could the right thing to do in the Bush administration suddenly become the wrong thing to do in the Obama administration?

Eileen Claussen served as assistant secretary of state for Oceans and International Environmental and Scientific Affairs. She is now president of the Pew Center on Global Climate Change.

by Eileen Claussen, President -- Published in Politico

Saving Oil and Reducing Greenhouse Gas Emissions through U.S. Federal Transportation Policy

This white paper is a follow up to the report Reducing Greenhouse Gas Emissions from U.S. Transportation


Saving Oil and Reducing Greenhouse Gas Emissions through U.S. Federal Transportation Policy

February 2011

Authored by: Cynthia J. Burbank and Nick Nigro

Executive Summary:

The United States consumes over 10 million barrels of oil per day moving people and goods on roads and rail throughout the country. Surface transportation generates over 23 percent of U.S. anthropogenic greenhouse gas (GHG) emissions. Transportation is the primary cause of U.S. oil dependence with its attendant risks to U.S. energy security. Contributions from this sector will be necessary in any effort to maintain a sustainable and secure economy in the future. There are many opportunities to save oil and reduce GHG emissions under existing federal law and possibly in the next surface transportation reauthorization legislation in the U.S. Congress, while increasing the mobility of people and goods in the
U.S. economy.

This paper identifies opportunities possible in transportation reauthorization legislation and using existing legislative authority that will save oil and reduce GHG emissions. The strategy focuses on five key elements: vehicles; fuels; vehicle miles traveled (VMT); system efficiency; and construction, maintenance, and other activities of transportation agency operations.

Download the full white paper (pdf)


About the Authors:

Cynthia Burbank is Vice President of Parson Brinckerhoff (PB). She joined PB in 2007 as National Environment and Planning Practice Leader. She provides strategic and tactical advice to PB’s clients on planning and environmental issues, including the National Environmental Policy Act (NEPA), air quality, and global climate change (GCC).This includes advising transportation clients on climate change strategies, analyzing greenhouse gas (GHG)-reduction potential of alternative transportation strategies, reviewing state climate action plans, and developing GHG reduction scenarios for transportation.

Cindy joined PB after a 32-year span with the U.S. Department of Transportation (U.S. DOT) that encompassed key roles in highway, transit, aviation, and national transportation policy and legislation. Cindy served as Associate Administrator for Planning, Environment, and Realty for the Federal Highway Administration (FHWA). She also served as FHWA’s senior executive with responsibility for FHWA’s implementation of the Clean Air Act (CAA) for transportation, NEPA policy, environmental streamlining, metropolitan transportation planning, statewide transportation planning, and international transportation planning. Prior to joining the FHWA in 1991, Cindy held positions in the Federal Aviation Administration, Federal Transit Administration, the Office of the Secretary of Transportation, and the U.S. Navy.  A member of the FHWA Senior Executive Service since 1991, she was designated in October 1998 as one of five core business unit leaders for FHWA.


Nick Nigro is a Solutions Fellow at the Pew Center.

Cynthia J. Burbank
Nick Nigro
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