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California opinion leaders say 'Lead in a smarter way on energy policy'

Posted by Gino DiCaro, VP, Communications on July 25, 2014

California wants to lead in everything. We should. We have abundant resources. We have a large pool of talent to innovate new products. We have the eighth largest economy in the world. We have capacity to scale up and make our products here and improve middle class opportunities exponentially.

Because California wants to lead in bold initiatives meant to get the rest of the country to follow, we must also lead in the smartest possible way.

California's most significant and groundbreaking initiatives include policies to reduce our dependence on fossil fuels. The rest of the country is watching. We have the highest renewable portfolio requirement, the first economy-wide carbon cap-and-trade system, the lowest carbon fuel standard and numerous other California-only policies that come at a price. We don’t have an energy plan that seeks to integrate these policies in a cost-effective and technologically feasible manner. In other words we aren't leading, we're implementing laws, closing our eyes, and hoping ... and now the word is getting out about mounting cost increases. Those spikes will be felt in the entire state economy, for our manufacturing sector that lags the country in growth, but also among our poorest consumers who need to buy essentials and depend on a future with higher wage jobs.

The lack of a well-implemented statewide energy plan to control costs is bubbling up among opinion leaders, including three previous governors. We thought we’d make sure we highlighted the recent pieces here:



Governors George Deukmejian, Pete Wilson and Gray Davis 
Comprehensive energy plan must balance environment and economy
Sacramento Bee, July 13, 2014

Energy, the economy and the environment – the three are inextricably linked. Energy prices impact the economy, but energy production impacts the environment.

This important interrelationship was understood to be fundamental to the formation of energy policy when each of us served as governor of California. It was true then, and it is true now. Because of this, effective energy policy in our state requires a careful balancing of coequal economic and environmental interests.

Perhaps no one appreciates the challenge of achieving this balance more than we do. As three former governors, each of us had to grapple with tough issues during our tenures, and our collective experience includes lessons learned from energy policy decisions. Based on this experience, we believe that California is at a pivotal moment when a long-term energy strategy is urgently needed – especially if California hopes to increase its economic competitiveness while achieving its clean energy and environmental goals.


Daniel Oaxaca — Founder and Executive Director at the San Gabriel Valley Conservation Corps
Striking a Balance Between Protecting Our Environment and Rebuilding Our Economy
San Gabriel Valley Examiner, July 23

Teaching today's youth to care for the environment will go a long way in building healthy communities. Likewise, creating a business landscape with job opportunities and economic growth is the platform from which our youth can become strong, independent, responsible citizens. Both environmental and economic priorities must be pursued equally in order to ensure prosperity for future generations in California.

The San Gabriel Valley Conservation Corps (SGVCC) holds a unique role in influencing the lives of disadvantaged youth, and we are committed to creating a balanced economic and environmental approach toward improving quality of life. You can't have one without the other, but we are seeing state policies that are more and more dismissive of their economic consequences.


John Husing -- Chief economist of the Inland Empire Economic Partnership
Op-Ed: Economics & Politics, Inc.
Redlands Daily Facts, June 16

Clean energy is golden for the local economy” (June 12) shows a misunderstanding of my research for the Inland Empire Economic Partnership on poverty, public health and regulation and underscores our difficulty in addressing the catastrophic fact that 800,000 Inland residents now live in poverty (19 percent) including 26.5 percent of our children.

It enunciates the widely held view in upscale communities that public health lies in continued aggressive regulation to create an ever-cleaner environment. However, that was not the conclusion of over 1,000 public health professionals and concern citizens who just spent 18 months establishing San Bernardino County’s public health direction. For them, education and poverty topped their priorities. Air quality did not make the list.


Dan Walters -- Columnist
Senate passes bill to make electricity even more expensive
Sacramento Bee -- June 9

There are probably a few people living off the grid in the backcountry of California, but the other 38 million of us depend on our local utilities for electric power. That makes us stakeholders in how that energy is produced, distributed and priced – the latter accounting for many, many billions of dollars.

One would think that the nearly universal experience of buying electricity – not to mention its indispensable economic importance – would make politicians reluctant to mess with it.


San Diego Union editorial
Climate plan faces new challenge: Gas prices
San Diego Union Editorial, July 16

Fear of a gasoline price spike is creeping into Sacramento as California’s gasoline and diesel producers prepare for the first time to pay for the air pollution their products create.

State clean air regulators are getting ready to extend a cap on greenhouse gas emissions to motor fuels in the transportation sector on Jan. 1, 2015. Fuel producers are likely to pass on costs for acquiring necessary pollution allowances to consumers at the gas pump, though at what price is uncertain.

That has led some state lawmakers to seek a delay, in the name of protecting low-income communities in the Central Valley and Los Angeles Basin. Breaking party ranks in an election year, 16 Democrats are seeking a three-year delay on expanding cap-and-trade.


Little Hoover Commission hearing
Rewiring California: Integrating Agendas For Energy Reform.
April 24

The hearing on April 24th in front of the Little Hoover Commission focused on issues raised by LHC’s report, “Rewiring California: Integrating Agendas For Energy Reform.” Three panels provided updates and information on energy planning and governance issues in the state. There were representatives from the California Energy Commission, Public Utilities Commission, and California Independent System Operator, as well as Rob Lapsley, president of the California Business Roundtable on behalf of CARE (Californians for Affordable and Reliable Energy), and Professor Severin Borenstein, director of the University of California Energy Institute at Berkeley, among others.


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Theory meets reality on California's carbon cap-and-trade program

Posted by Gino DiCaro, VP, Communications on Aug. 16, 2012

Theory met reality on Tuesday at a Senate informational hearing on California's carbon cap-and-trade program that is set to start with an auction in November 2012. Craig Anderson from Solar Turbines, an industrial gas turbine manufacturer with 4,000 employees in San Diego, testified that the soon-to-be-fully-implemented cap-and-trade program is the most significant threat to his company's growth.

"I can say without hesitation that AB 32 is viewed by our company leaders as not only the most significant environmental regulation we have faced in California, but also the greatest threat to the growth of our business in California," said Anderson.

You can view Anderson's full testimony here (5:45 min).

Following are more real world impacts from employer testimony on Tuesday. These are companies that, as you'll see in their video remarks, are already some of the cleanest and most efficient in the world.

Mona Schuman with Pacific Coast Producers

"Our costs over the life of this program will be at a minimum $1.5 million to $2 million dollars."

"If cost of allowances go to high for us, our option is to reduce production. Reducing production means reducing jobs, reducing our growers crops and all the suppliers and vendors that supply our growers. "

View testimony here (5:49)

Ryan Modlin with Owens-Illinois

"It costs us 30 percent more already for us to do business in California than anywhere else in the United States. Under this program, it will add a couple million dollars at $20 per ton."

View testimony here (8:49)

Rob Joyce with Guardian Industries

"Compliance costs associated with cap-and-trade regulation will likely erode the competitiveness of flat glass manufacturers in California without providing a meaningful incentive to reduce greenhouse gas emissions."

View testimony here (7:49)

Key questioning and testimony also came from Sen. Rod Wright (Committee chairman), Sen. Michael Rubio, Sen. Bob Dutton, LAO's Tiffany Roberts, CMTA's Dorothy Rothrock, Insulation Manufacturers' Angus Crane, WSPA's Cathy Reheis-Boyd, NFIB's John Kabateck, CLFP's John Larrea, and a Gallo glass worker and representative. (click names for video).

Collectively the hearing's appeal to the California Air Resources Board was to freely allocate emission allowances up to the cap, for all industries, for all eight years of the program. There is no reason to do otherwise. California will still reach its goals and companies will still be forced to reduce to their capped benchmark. (Here is a chart to show how the current auction will charge the food processing industry beyond the cap over the next eight years).

The cap-and-trade concerns reached far beyond employers and workers this month too. The Federal Energy Regulatory Commissioner Philip Moeller wrote a letter last week to Gov. Jerry Brown asking him to

“suspend enforcement of the prohibition of resource shuffling until such a time that ARB clarifies rules surrounding compliance with, and enforcement of, the provisions. Suggested guidance documents are not sufficient, as these do not provide the certainty needed by market participants."

“I am now, however, extremely concerned about the potential disruption to California's electricity market that may arise from the California Air Resources Board's (ARB) implementation of California's greenhouse gas trading plan...."

View the complete letter here.

It's now CARB's turn, before it is too late, to get realistic about making this program work for California's economy and environment.

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California's cap-and-trade needs to be well-designed to protect manufacturers

Posted by Gino DiCaro, VP, Communications on Aug. 17, 2011

California has lost a third of its manufacturing sector and the California Air Resources Board (CARB) continues to try to implement the state's AB 32 carbon reduction program in a cost-effective manner.  The rest of the country has lost a large portion of its manufacturing as well, but at least temporarily given up on mandatory carbon reductions.
Cap-and trade is the policy with which CARB intends to produce about 20 percent of the state's carbon reductions but it is targeted at about 600 facilities during the first three years.  Under the program cap, a facility will either have to pay for more expensive equipment to produce less carbon, pay for an offset, or purchase credits in a market.
California industry is famously efficient due to decades of higher than average energy costs, including 50 percent higher electricity rates than the rest of the country.
This is why it is so important that California creates a well-designed cap-and-trade system.  It must be tested, proven, and refined (and not rushed) to minimize any more leakage of high wage jobs out of California, and it must ensure competitive costs for consumers.
Last week marked a CARB deadline for public comments regarding their implementation of a cap-and-trade program.  The manufacturing community issued a formal letter in its now 3-year effort to help CARB understand the impacts of developing AB 32 regulations.
Serious concerns remain regarding industry carbon benchmarks that penalize the superior energy efficiency of California industries, the lack of any qualified leakage risk analysis, the issue of CARB's sole authority for dispute resolution, and the stringent limit on the ability to purchase offsets. 
CARB recently adjusted the start date for the state's cap-and-trade program from 2012 to 2013.   This delay will help.  We ask that CARB takes this time to address the serious concerns of our largest wealth creators.  California's manufacturers and other potential California investors are holding out for a well-designed result.

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In closing hours of Governor's bill signing period, two economy-busters loom and require a veto

Posted by Gino DiCaro, VP, Communications on Sept. 30, 2010

Up against tonight's midnight deadline to sign or veto all bills, the outcome of two specific bills could make or break Schwarzenegger's legacy of commitment to our economy. If the bills become law, they stand to send big signals to private sector job creators that California is not interested in their ability to compete and grow jobs.

AB 569 provides special treatment for a few unionized industries and fixes 'meal and rest' regulations for only a select few, leaving a large majority of our private workforce and employers without help. Gov. Arnold Schwarzenegger's signature would likely end any chance for a comprehensive fix. On the flip side, his veto would signal the state's commitment to denying special treatment for unions and growing jobs in all industries. See recent CMTA opinion HERE.

AB 1405
directs an arbitrary 10 percent of revenues collected by the California Air Resources Board from a cap-and-trade carbon program for undetermined purposes in a community benefit trust fund. They haven't even implemented cap-and-trade and they are already working on a money grab. This is premature and will interfere with development of a potential cap and trade program. CARB must balance cost effectiveness, co-pollutant impacts, and technological feasibility as they develop regulations under AB 32. These criteria are vital to reduce greenhouse gas emissions and support the economy. See CMTA veto letter HERE

Come on, Gov. You can do this! Help California's economy and help grow our high wage private sector job base.

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'Cool Cars' embodies Sacramento's 'bumbling, well-intentioned, paternalistic nonsense'

Posted by Gino DiCaro, VP, Communications on Feb. 23, 2010

The California Air Resources Board (CARB) is looking to finalize its "Cool Cars" policy this Thursday, once again putting regulation before reason and imposing knee jerk command-and-control mandates with no regard for economic impacts and, in this case, public safety.

**** Since this blog was written I have been corrected by CARB that it is not on the agenda for Thursday.  But no doubt folks are still showing up to testify in the public comment period on the issue *****

Here's the nickel tour:

CARB's  "Cool Cars" policy was set up in 2009 as an AB 32 early action item to reduce the state’s greenhouse gas emissions by reflecting heat away from cars, thereby requiring less air conditioning and less fuel.

CARB originally tried to ban dark colored vehicles.  That didn't fly with the public, auto dealers, manufacturers and anyone else who breathes in California.  Whew.

CARB then focused on a policy that mandated a reflective layer in all car windshields by 2012 and all windows by 2016.  They did this before any analysis on economic or safety impacts and without regard for alternatives with similar emission reductions.

Policies like this require extensive research to ensure proper benefit with the least amount of economic burden.  Over the past few months important information and data on these two fronts has emerged from the Wireless Association and the Auto Alliance that prove that the proposed "Cool Cars" policy creates:

  • A substantial economic burden (costs 2 and a half times more than CARB reported)
  • A serious concern about public safety because of negative effects on GPS ankle mechanisms and less cell phone 911 call completion
  • Overall administrative nightmares for any system using toll road and bridge transponders

Even when presented with these problems and new information on better alternatives, CARB is still unwilling to budge and provide any flexibility or necessary changes in the regulation.

The ultimate absurdity of "Cool Cars" is that the policy discourages new green tech and innovation in our automobiles.  Solar absorptive technology incorporated in windshields is an alternative approach and is 90 percent as effective in reducing the build-up of heat in a vehicle. This technology has none of the negative outcomes of the proposed "Cool Cars" regulations.   Further, there is a decent chance this less costly and more efficient technology (along with other alternatives) could be adopted nationally or semi-nationally, meaning larger emission reductions countrywide.

CARB in the end wants it one way.  Their way.  CARB is going it alone, ignoring the studies and contributing to what the Orange County Register called in a November editorial, "Sacramento's caricature of bumbling, well-intentioned, paternalistic nonsense".


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