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California’s powerful environmental regulator has ordered the recall of all Volkswagens, Audis and Porsches equipped with software secretly installed to defeat emissions tests.

“On November 25, the California Air Resources Board sent an In Use Compliance letter notifying Volkswagen, Audi and Porsche to start the process necessary to recall and repair illegal emissions software in all 3-liter diesel vehicles, model years 2009–2015, sold in California,” NACS reported. “According to a press release, the automakers have 45 business days to assemble their plan and deliver it to CARB.”

The figures were added atop the 482,000 cars Volkswagen had previously admitted to rigging, as Bloomberg noted. “That revelation, concerning 2-liter diesel engines from the 2009 through 2015 model years, sparked criminal probes in Europe and the U.S. and led to the resignation of the company’s chief executive officer.”

Flexing its muscle

The new letter marked just the latest twisting of the screws from the Board, which has aggressively pursued action against the auto maker. “The notice from the California Air Resources Board came less than a week after state and federal regulators disclosed that Volkswagen Group automakers installed software to cheat emissions tests on more diesels than initially thought,” AP reported. “The U.S. Environmental Protection Agency and the California Air Resources Board said last week the software was on about 85,000 Volkswagen, Audi and Porsche vehicles with 3-liter, six-cylinder engines going back to the 2009 model year.” Cars were programmed, according to the New York Times, to trigger a “special eco-friendly mode with lower emissions of nitrogen oxides” when they detected that a lab test had begun.

The Board was instrumental in flushing out Volkswagen’s malfeasance, helping blindside the company by making the revelations public. In a remarkable twist, the Board recently confirmed comments made by director Mary Nichols, published in a German business magazine, “suggesting that the German government may have had information as early as 2010 about Volkswagen AG’s difficulties meeting restrictions on nitrogen oxide emissions in the U.S.,” the Wall Street Journal reported. “Ms. Nichols said she was surprised that Ms. Merkel had such specific knowledge of the problems with nitrogen oxide emissions that German manufacturers faced.”

Just last month, it slapped the company with the second of two notices of violation. “On September 25, the California Air Resources Board sent letters to all manufacturers letting them know we would be screening vehicles for potential defeat devices,” Richard Corey, the Board’s Executive Officer said. “Since then ARB, EPA and Environment Canada have continued test programs on additional diesel-powered passenger cars and SUVs. These tests have raised serious concerns about the presence of defeat devices on additional VW, Audi and Porsche vehicles.”

An unending scandal

The damage to Volkswagen has been substantial: “Dealers labored for most of the month with inadequate saleable inventory on their lots,” as the Orange County Register reported, with the auto maker saying “sales of its namesake brand declined 25 percent from a year earlier, largely because the company couldn’t sell any diesel-powered cars.” The company, which confessed it had cheated emissions tests on its diesel cars, halted their sale, falling back on only its gasoline-powered vehicles.

Trouble has spread overseas as well. Although Volkswagen had previously said it was unsure whether the cheating software violated European regulations in addition to U.S. and Californian ones, German regulators recently announced that it did. “The determination by German regulators that VW had cheated could affect a flurry of European consumer litigation, though it is unclear what fines the company might face in Europe,” the Times observed. “While European Union member states were supposed to enact penalties for cheating on automotive tests several years ago, few have done so.”

Brown also said the problem is so complex that it’s likely no one knows how to solve it.

Emissions Targeted

The governor conveyed his warning at the California Air Resources Board’s Oct. 1 workshop, “California Climate Change Scoping Plan: 2030 Target.”

The 2030 target reduces California’s greenhouse gas emissions to 40 percent below 1990 levels in the next 15 years. Brown also designated a 2050 target: emission reduction to 80 percent below the 1990 level.

The 2030 target is “the most aggressive benchmark enacted by any government in North America to reduce dangerous carbon emissions over the next decade and a half,” said Brown in an April 29 statement.

The governor began his remarks at the workshop with an admission of ignorance on climate change science.

“I come today because this is a topic that is not easy to grasp,” he said. “It’s complicated. The more you dig into controlling air pollution or measuring greenhouse gas emissions or attempting to understand the [climate] models that examine and attempt to predict how world climate patterns will change over time, it definitely is a very complicated science that we mere lay people just get little glimpses of.”

That complexity makes it easy for climate change skeptics to disseminate misinformation, according to Brown.

“It allows people who have bad motives or soft minds to then raise doubts that are not based on science or facts, but are able to be communicated without people reacting with total ridicule,” he said. “And it takes enough knowledge that it’s hard to be in this conversation at any level of depth.

Relying on Climate Scientists

Brown said we should rely on climate change scientists who “have clearly stated that human beings and the industrial activity of our modern lives is affecting climate by building up heat-trapping gases, and that the effects over time will be catastrophic.”

“When and how all of that unfolds is something that cannot be said on a precise date,” he continued. “But we know with a high degree of confidence that we are facing an existential threat to our well being and the well being of the generations that come afterwards.”

Brown acknowledged that the public has thus far been largely indifferent to the climate change issue, ranking it well below crime and jobs among issues they are most concerned about. That indifference or ambivalence may be due to the omnipresence of fossil fuels in the quality of our lives.

“What we are looking at is making a shift in the way life shows up,” Brown said. “We are who we are because of oil, coal and natural gas. Fossil fuels is what makes it. I assume that most of the people here are here because fossil fuels got you here, clothed you, medicated or whatever way you are functioning as a modern person, you are dependent on fossil fuels.

“So when we say we are going to reduce [emissions by] 10 percent, 20 percent, 40 percent, we are setting forth a huge challenge that is very easy to state. But anybody who has any understanding of what is implied by what is being called for, realizes this cannot be done lightly or without a mobilization globally that we have never seen before outside of time of war.”

Potential Economic Meltdown

Brown, citing a Sept. 29 speech by the Governor of the Bank of England Mark Carney, warned there is a potential for a global economic meltdown when energy companies are forbidden from using up to a third of their fossil fuel resources.

“Once it becomes conventional wisdom, once we get it that climate change is going to be catastrophic and that becomes clear and vast majorities of people at all levels of society agree with that, it may be too late because we’ll be too far down the road,” he said.

“If the oil and gas companies are undermined, the financial system itself can be undermined. We can’t wait until everybody gets it. We have to start now.”

Brown said the state’s current annual output of 460 million tons of carbon dioxide-equivalent emissions must be reduced to 431 million tons by 2020 and down to 260 million tons by 2030.

“To go from 460 where we are to 260, that takes heroic effort, scientific breakthroughs, massive investments, a lot of cooperation and a political understanding that does not exist today,” he said. “So this is not stuff for amateurs. This is quite challenging.”

“It’s a political problem,” Brown continued, “but also it’s a technical problem. And it’s going to require a lot of breakthrough, a lot of research and billions, tens of billions of dollars, invested by many, many different sources.”

It will also require Californians driving a lot less, he said, by living closer to where they work and telecommuting. “Californians drive over 330 billion miles a year – 32 million vehicles of various kinds moving around on almost entirely fossil fuel,” he said. “We’re going to reduce and take fossil fuels out of our lives and out of the economy.

“And we’re going to creep our prosperity and ability to keep inventing and improving the quality of everybody’s life. And not only here, but we’re going to do it all over the world. And we’re going to add a couple billion people besides and probably another billion cars.”

Changing Lifestyles

The governor admitted, “How the hell we do that, probably nobody knows. But the people who have the best understanding and the best capability to do things [are] right here.”

Brown acknowledged that it will be a big challenge convincing people to change their lifestyles. He also admitted that even getting the conversation started is tough:

In my world of politics this is … a dark reality that you just can’t even talk about. Because it’s too obscure, too complicated, it’s not high in the polls, “don’t bother me now.” But if that mood persists … it will be too late then, and there will be a real catastrophe.

People don’t like to think that something horrible could happen. We all like our happy time news in the morning. But you got to see it, and then we have to take steps to make sure it doesn’t happen.

This is about taking the steps to deal with fuels, the investment in biofuels, [energy] efficiency in appliances and buildings, across the whole range of how our modern civilization works, within the limited reach that the Air Resources Board has confidence and the legal authority to do, which is quite a lot. Everything that can be done will be done. California will do what it has to do.

Leading the Way

Brown believes California is setting an example other states and countries will follow.

“People know about California, people are watching what’s going on, and there’s a lot of goodwill to get us to the goal,” he said. “Of course, it’s going to take a lot more than goodwill. It’s going to take billions, trillions of dollars. And it’s going to take commitment all over the world.”

Brown’s pep talk received a standing ovation. After the applause died down, CARB Chairwoman Mary Nichols said, “You can see why I get up raring to go to work every morning.”

Facing Opposition

No one at the workshop questioned whether California’s efforts will do much to prevent the planet’s climate from changing, and whether the cost will be worth it.

But state Sen. Andy Vidak, R-Hanford, issued a statement on Oct. 7 in opposition to Brown signing into law Senate Bill 350, which mandates an increase in renewable energy among other emission reduction actions:

The district I represent is still reeling from the Great Recession and the devastating years-long drought. Too many people in rural and inland communities are impoverished; standing in food lines because they can’t find work to make ends meet.

Senate Bill 350 is a devastating measure that will force already-struggling families deeper into poverty by drastically increasing energy costs that are already some of the highest in the nation.

It’s wrong when parents have to choose between the necessities of keeping the lights on and feeding their children. The governor’s signature on SB350 kicks folks while they are down. It is a selfish gesture designed to fluff up his “legacy” and pander to coastal elites’ “environmental” self-righteousness.”

The impact on most Californians from the state’s climate change regulations has been minimal thus far. The state has been averaging a 1 percent reduction in greenhouse gas emissions annually. That pace is projected to continue through 2020, and is enough to meet the 2020 reduction goal.

But residents and businesses will be hit harder after that. Emissions will need to be reduced by at least 5.2 percent annually from 2020 to 2030 in order to meet the 2030 target.

“This gives an indication of the challenge of the work that we have ahead of us in the scoping plan to develop an approach, to develop a set of measures that can contribute to and achieve this ambitious greenhouse gas reduction level for 2030,” said ARB Assistant Executive Officer Michael Gibbs.

An analysis of the economic impacts of the climate change regulations will be conducted as a part of the scoping plan. No cost estimates were provided at the workshop, but several officials in addition to Brown said that billions of dollars in increased funding will be required.

“Investment in [energy] efficiency [in buildings] will need to be quadrupled or quintupled from today’s levels in order to reach the scale necessary to meet the 2030 and 2050 goals,” said Patrick Saxton, representing the California Energy Commission. “Clearly this is much more than ratepayers and taxpayers can fund on their own.”

Regional workshops on the scoping plan will be held this fall; the Air Resources Board will receive an update on Nov. 19. The draft plan is scheduled to be released in spring 2016. The final plan is expected to be approved in fall 2016.

Manipulating tests

Board chairwoman Mary Nichols, a close longtime ally of Gov. Jerry Brown, revealed that the board was organizing itself for what she called a “major enforcement action,” according to Reuters. “The state is also preparing to oversee a recall of vehicles in California equipped with the device that allowed it to pass laboratory tests measuring their output of the air pollutant NOx, which contributes to smog, Nichols said.”

Initially, VW cars tested in the board’s lab passed inspection. But when the International Council on Clean Transportation discovered huge discrepancies in VW’s emissions during real-world tests, state and federal regulators closed in. “The California watchdog and the U.S. Environment Protection Agency opened an investigation into Volkswagen in May 2014,” Bloomberg reported. “The company said it had identified the reasons for the higher emissions and proposed a fix. That resulted in a recall of nearly 500,000 U.S. vehicles in December to implement a software patch.”

But those changes weren’t enough. The board suggested road tests didn’t vindicate the patch. “Sure enough, nitrogen oxide emissions were still in violation of California and U.S. laws. The agency shared those findings with Volkswagen and the EPA on July 8,” Bloomberg noted.

The board’s assertiveness reflected an intention to make up for its failure to detect the emissions using more frequent road tests. But spokesman Dave Clegern told the Sacramento Bee that the board had been hobbled by the pace of technology, insisting “the agency didn’t have access until three years ago to the portable emissions testing devices needed to road-test diesel cars for emissions.” Now, along with the EPA, the board has moved to put automakers on notice that scrutiny has been heightened. Although there’s no evidence another automaker has evaded standards, Clegern said, “it’s better to be safe.”

Private action

In addition to spreading outrage among environmentalists, VW’s deception raised immediate questions about its direct impact on people’s health. “The engines that VW tweaked to run quickly and efficiently also spewed out a form of pollutant that, over time and in big numbers, can be lethal,” the Orange County Register observed. “Based on academic research about the health effects of nitrogen oxides, numbers of vehicles on the road and the miles driven, the affected cars may have killed dozens of people in California and more than 100 nationally.”

As was to be expected, Volkswagen has been hit with a barrage of lawsuits. Two suits “have been filed in San Diego and Los Angeles over Volkswagen tampering with emissions testing on VW and Audi models to deceive regulators,” reported NBC San Diego. In Sacramento federal court, plaintiffs sought certification for a class action suit “on behalf of ‘tens of thousands’ of Californians who purchased or leased one or more of the diesel VWs secretly equipped by the manufacturer with a device that defeated emissions tests by federal and state regulators,” according to the Sacramento Bee. “Model years 2009 to 2015 are targeted in the complaint.”

Meanwhile, irate VW dealers found themselves “paralyzed” by the crisis, according to the Los Angeles Times. Because they’re not employed by Volkswagen, they have escaped liability for its wrongdoing but wound up unable to sell product or reassure customers. “The Environmental Protection Agency has refused to certify the 2016 line of Volkswagen diesels, and the company has issued a stop-sell order to its dealers, preventing them from selling new diesel cars and certified used ones,” the Times noted.

California officials have begun a massive effort to eventually eliminate gas-fueled cars from state roads, led by a powerful regulator with Gov. Jerry Brown’s unwavering support.

Legislating the future

Mary Nichols, head of the state’s Air Resources Board for the past eight years, “is pushing regulations today that could by midcentury all but banish the internal combustion engine from California’s famous highways,” as a recent Bloomberg interview revealed.

More than any other single official, her sway has been potent and protracted. In addition to overseeing state emissions policy, “Nichols plays a central role in deciding where Californians get their energy, what fuel goes in their cars and how their homes are built,” the Los Angeles Times observed late last year in a report on her “rock star” influence.

On emissions, Nichols’ labors have led up to a key legislative session next month. “September will be the biggest test for the 70-year-old Nichols’ grand plans,” according to Business Insider. “That’s when her mandate of having only zero-emissions on California roads by 2050 will be debated and voted upon by the state Legislature.”

Tough to tougher

A victory for Nichols in Sacramento would dramatically exceed the Golden State’s already substantial auto regulations. “The zero-emissions vehicle program that California has in place at present requires that 2.7 percent of new cars that are purchased within the state in 2015 be free of greenhouse gas emissions,” as Gas2.org noted. “Under current plans, California will gradually increase this figure starting in 2018, so that, by 2025, as many as 22 percent of all new cars sold in the state are required to be emissions free.”

In pushing past those strictures, Nichols has become the chief enforcer of Gov. Brown’s broad environmental vision. Although then-Gov. Arnold Schwarzenegger began her current tenure, it marked a return to the regulatory role Brown had carved out for her turning his first two terms in office. Between stints, “Nichols’ career resembled a grand tour of California’s environmental world,” according to the Times: “Opening the Natural Resources Defense Council’s Los Angeles office, leading the Environment Now foundation, serving as resources secretary for Gov. Gray Davis. In a detour to Washington, she worked in the Environmental Protection Agency under President Clinton.”

It was not difficult for Nichols to pick up where she left off when Brown regained the governorship. In 2013, she made Time’s list of the world’s most influential people. “There’s no daylight between what I think and what Mary thinks on climate change,” Brown told Bloomberg. In April of this year, he issued an executive order mandating, by 2030, a reduction in statewide emissions to a level 40 percent lower than attained in 1990.

More rigorous than the policy of any government in North America, Brown’s framework drew international attention. Largely convinced that even sweeping action at the national or regional level lacks the reach to significantly alter global environmental conditions, climate change activists and sympathetic policymakers have increasingly looked upon Brown’s efforts as a catalyst that could inspire similarly aggressive measures around the world. “There can be no substitute for aggressive national targets to reduce harmful greenhouse emissions,” World Bank president Jim Yong Kim remarked at the time, “but the decision today by Governor Brown to set a 40 percent reduction target for 2030 is an example of climate leadership that others must follow.”

Upcoming negotiations

Beyond what happens in Sacramento this September, auto makers have hunkered down for another round of jockeying with Nichols over next year’s review of zero-emissions vehicle rules — a suite of mandates incorporating credits and incentives “more complicated than a simple numerical quota for electric vehicles,” according to Bloomberg. Automakers, doubtful that demand for all-electric vehicles will match Nichols’ goals, have already pushed for an increase in credits for hybrid vehicles.

Convinced that California’s emissions targets won’t be met until they comply, Nichols told Bloomberg “she can offer expanded preferential access to freeways and parking spaces for ZEVs, along with more charging stations and bonuses for dealers. She mentions another possible concession: a slower acceleration of the ZEV mandate.” Although car companies like Tesla have reason to cheer such developments, for others, Nichols’ persistence augurs another long summer.

Research by UC Berkeley energy scholar Rebecca R. Hernandez and energy researchers Madison K. Hoffacker and Chris Field found that …

the amount of energy that could be generated from solar equipment constructed on and around existing infrastructure in California would exceed the state’s demand by up to five times. …

“Integrating solar facilities into the urban and suburban environment causes the least amount of land-cover change and the lowest environmental impact,” Hernandez explained.

Just over 8 percent of all of the terrestrial surfaces in California have been developed by humans — from cities and buildings to park spaces. Residential and commercial rooftops present plenty of opportunity for power generation through small- and utility-scale solar power installations. Other compatible opportunities are available in open urban spaces such as parks.

Likewise, there is opportunity for additional solar construction in undeveloped sites that are not ecologically sensitive or federally protected, such as degraded lands.

“Because of the value of locating solar power-generating operations near roads and existing transmission lines, our tool identifies potentially compatible sites that are not remote, showing that installations do not necessarily have to be located in deserts,” Hernandez said.

But the research paper doesn’t focus strongly on the costs involved. Even as they add renewable supplies, utilities continue to need inexpensive sources of power because of their obligations to shareholders and because of public pressure. Even as the cost of solar arrays comes down and their efficiency increases, natural gas has never been cheaper in inflation-adjusted dollars.

According to the California Public Utilities Commission, 35 percent or so of natural gas used in California in recent years has come from other states benefiting from the fracking-driven boom in energy exploration.

In 2050, state can’t “be burning much of anything”

At a January conference in Los Angeles, however, top state officials seemed of two minds about California relying on natural gas:

California has been one of the nation’s bigger users of natural gas, employing it as a bridge fuel for some time as it moved away from coal and oil, said Robert Weisenmiller, chairman of the California Energy Commission. The fuel accounted for 60.5 percent of in-state generation in 2013, the CEC has said.

“It’s certainly been a part of our strategy,” Weisenmiller said. “At the same time, we’re certainly looking at a stage now of saying, ‘What’s next?'”

At the same conference, Mary Nichols, the head of the California Air Resources Board had different views. Nichols …

… rejected the premise of the panel she was on, dubbed “Natural Gas — Part of the Problem or Part of the Solution?” ARB is “fuel neutral,” she said, when the agency looks at cutting greenhouse gas emissions. The Golden State aims to shrink those to 1990 levels by 2020, and 80 percent below 1990’s point by 2050.

Nichols added, however, that the state needs “to look at the full life-cycle picture of emissions when we talk about any fuel,” including production, transport and use.

“When we do that, we certainly find ourselves in agreement with the [state] Energy Commission that right now, it’s pretty hard to see how in 2050 we can be burning much of anything in the state of California to meet our carbon goals,” Nichols said.

That is from reporting by the Energy & Environment Publishing news website.

Actually it’s rule by bureaucracy. The vast bureaus of federal, state and local governments run our lives, and there’s not much that can be done about it until the whole shebang goes bankrupt.

Presidents, governors and mayors can nudge things a little in one direction or another — almost always making the bureaucracies bigger and more thuggish, as with Obamacare — but that’s about it. Even Reagan couldn’t fulfill his 1980 campaign promise to eliminate the departments of Education and Energy.

This is shown in the title of a Los Angeles Times article, “Mary Nichols has ‘rock star’ influence as top air quality regulator.”

In yet another puff piece of an advocate of much bigger government, the Times enthuses:

A meeting with Gov. Jerry Brown and Chevron executives was ending when an oil company official turned to Mary Nichols, California’s top regulator for air pollution.

There was only so much Chevron could do to meet the state’s rules, he told her. “I know we’ve told you before that we couldn’t do things that you wanted us to do, and then we’ve turned around and succeeded,” he said. “But this time we really mean it.”

The October conversation, recalled by Nichols in a recent interview, echoed many others in her decades-long career as an environmental lawyer and regulator.

Once it was car companies fighting her efforts to reduce the smog choking Los Angeles. Now it was the oil industry resisting gasoline restrictions intended to stem climate change.

“They’re just being irritating,” she said.

Note how, like a commissar, she dismisses those she’s supposed to be serving as “irritating.”

Smog

And the Times fails to note that smog and “climate change” are two different things. To know smog was real you just had to breathe.

But “climate change” is a euphemism used for “global warming” starting around 2007, when it was becoming clear “global warming” wasn’t happening and new a snooker phrase needed to be developed to keep the bureaucrats in power and the tax dollars flowing to them.

Indeed, Nichols’ authority over “climate change” — in the Times’ parlance — actually comes from what still is called AB 32, the Global Warming Solutions Act of 2006, which is called that on her very own website.

The bill was signed into law that year by Gov. Arnold Schwarzenegger, who still touts it as the signature achievement of his disastrous administration. He used to give a stock speech reviling his Austrian homeland for its hidebound government bureaucracy, and how he escaped to free America. But it was just such a sclerotic bureaucracy that he worsened in California when his AB 32 vastly increased the powers of Nichols and her California Air Resources Board.

Meanwhile, we’ve now had 18 straight years with no global warming.

But Nichols’ powers just keep getting greater. After all, she’s a rock star.

We hear plenty of CARB critics from libertarian and conservative circles. Here’s what a sharp liberal critic of CARB sounds like:

Now, say a utility in a carbon market wants to reduce its carbon emissions. It could build renewable energy generation, or launch efficiency or demand-response programs, but gosh, that stuff is expensive and difficult. Isn’t there something easier and cheaper? Why yes! Here’s two other things it could do.

One, it could sell its ownership stake in a coal plant and buy a stake in a natural gas plant. Voilà! The net emissions of its power portfolio has declined.

Or two, it could shuffle power contracts away from coal plants to unspecified sources, which are treated as natural gas. (More sinister yet, it could help a coal plant obscure the source of its power, rendering it unspecified.) Again: voilà! For bookkeeping purposes, its emissions have fallen.

See what’s wrong here? In both cases, the utility reduced the emissions for which it is responsible, but real-world emissions did not decline at all. The same amount of dirty energy is still feeding into the western grid. The emissions just got “shuffled” off the California utility’s books.

For obvious reasons, resource shuffling is bad news for carbon markets. It makes carbon emissions into a meaningless shell game, exactly the sort of shenanigans cap-and-trade critics are always warning about.

CA regulators saw problem coming

Liberal lawmakers have long downplayed this potential problem. But Roberts says CARB was aware of it and wrote AB 32 to avoid it — at least in theory:

AB32 contains strong language on leakage, saying that regulations must “minimize leakage” and that emission reductions achieved under the program must be “real, permanent, quantifiable, verifiable, and enforceable by the state board.”

And the initial guidance document written by regulators (which details the mechanics of how AB32 is to be implemented) stated clearly that “resource shuffling is prohibited and is a violation of this article.” In fact, the initial guidance contained a provision that would have forced utility executives to testify under oath that their emission reductions were real and not merely shuffled. Powerful and unambiguous stuff!

UC Berkeley research fellow Danny Cullenward tells the story of what happened next:

“[Banning resource shuffling outright] proved controversial. In the months leading up to the beginning of the market’s first compliance period, several stakeholders objected to the resource shuffling rules and began agitating for reforms. The first public proposal came from California’s investor-owned utilities, which in September 2012 advocated a series of exemptions to the prohibition on resource shuffling. The following month, [the California Air Resources Board] directed its staff to develop modifications to the resource shuffling regulations, providing 13 fully developed ‘safe harbor’ exemptions to the definition of resource shuffling directly comparable to, if not more permissive than, the Joint Utilities Group proposal. A few weeks later, CARB staff released a new regulatory guidance document that incorporated these safe harbors, almost word for word.”

So the new AB32 regulations now say that resource shuffling is prohibited … except “when the substitution occurs pursuant to the conditions listed in section 95852(b)(2)(A).” Just a little tweak, right? Except 95852(b)(2)(A) contains loopholes wide enough to sneak a coal plant through. (To see for yourself, check out the current regulations, pp. 106-108.)

In other words: California regulators caved.

CARB’s self-reverence may not be deserved

One person’s view of what constitutes caving might well be another person’s reasonable compromise. But it’s still interesting to see a liberal, deeply informed out-of-state journalist — Roberts lives in Seattle — investigate the air board and conclude that the agency’s high opinion of itself isn’t warranted.

David Roberts will find lots of libertarian and conservative Californians probably agree with him on this, starting with Cal Watchdog contributor … Dave Roberts.

The California Air Resources Board rejected pleas at its latest meeting to delay bringing transportation fuels into the cap-and-trade program – despite arguments that it will result in higher gas prices, cost thousands of jobs and harm the state’s poorest residents.

Cap-and-trade was launched in 2012 as part of AB32, the Global Warming Solutions Act of 2006, which has the goal of reducing greenhouse gas emissions in the state to 1990 levels by 2020. Cap-and-trade began by mostly affecting electric utilities and large industrial facilities. In January the program will also include transportation and natural-gas fuel suppliers.

Bill McKinney, representing the California Drivers Alliance, presented CARB with petitions that he said were signed by more than 115,000 Californians asking for a delay in bringing transportation fuels under cap-and-trade.

“Bringing transportation fuel into the cap-and-trade program will be the first time most Californians will be exposed to the direct impacts of California’s climate change policies,” McKinney told the board Oct. 23. “We can tell you the overwhelming majority of California’s 23 million motorists will be directly impacted by this regulation, are unaware it is coming and will have no idea why they are seeing their fuel costs rise.

“We believe this regulation amounts to a hidden gas tax on consumers. ‘Hidden’ because there has not been any significant effort to educate consumers. And a ‘tax’ because it will transfer billions of dollars from the pockets of fuel producers and fuel users to the state of California.”

He cited a CDA-commissioned study which, he said, “concludes the higher cost associated with this regulation will result in the loss of 18,000 jobs in 2015 alone and nearly $3 billion in lost economic output at the low end of the impact range. At the upper range, job loss could reach 66,000 and economic dislocation $10 billion.

“It seems to us entirely appropriate and reasonable to ask that a program of this magnitude, with an impact as far-reaching as it will have, be subjected to a more open and transparent process before it goes into effect. For these reasons we ask that you delay the program and undertake a public education program to inform California consumers why and how it is being implemented. We would also ask that CARB provide the public one or more opportunities to be heard on this important issue.”

‘Design flaws’

Also pleading for a delay was Tupper Hull, vice president of the Western States Petroleum Association. His organization commissioned a white paper that cited several “design flaws” in the cap-and-trade program. They include “the infrequency of auctions, ARB’s cost-containment policies, ARB’s approach to markets and the rule of law, and the program’s relationship to impending federal GHG [greenhouse gas] regulations.”

“Our association does not and has never opposed the use of market-based systems like cap-and-trade to reduce greenhouse-gas emissions,” said Hull. “What we have said consistently is that those programs must be fair, must be efficient and must be designed properly to provide the maximum benefits at the lowest possible cost.

“We are also not asking the board … to repeal the regulations expanding the program. We are asking for a delay. We also do believe as well that Californians are not well informed about this program. Nor are they prepared. Learning about it through higher costs that could very likely appear at the retail level could have a negative impact, clearly for our members, but also for the board and the state in the ability to achieve the environmental goals that you want to achieve.”

Their pleas fell on unsympathetic ears. Chairwoman Mary Nichols disagreed that CARB has not provided opportunities for the public to be informed and heard on the cap-and-trade program.

“If you’re interested, I’m happy to supply you and the members of your organization with a list of 12 publicly noticed meetings and workshops that were held by the Air Resources Board, all of which were attended by representatives of the industries that are a part of your coalition as well as people who are consumers of gasoline in this state, including ourselves,” Nichols said. “As well as copies of detailed testimony that was submitted by WSPA on this entire issue going back as far as 2009. So I think in the interest of fairness you should take a look at that as well.”

Skeptical

Board member John Gioia is skeptical about the findings in the white paper, which was issued Oct. 16. “There’s already folks starting to look at the white paper WSPA had produced that identified some flaws in the white paper itself,” he said.

He also disputed the idea that the state treasury is the sole beneficiary of the cap-and-trade revenue.

“Actually a lot of the cap-and-trade revenue is going to flow down to local communities in the form of programs like energy efficiencies in homes, how we work on cleaning the air in local communities,” he said. “So it’s actually not all to the state; much of it goes to local communities.”

And Gioia, who is a Contra Costa County supervisor, pooh-poohed the notion that the public purposely has been kept in the dark about something that could affect the price of gas at the pump.

“Frankly, coming from a county that regulates the safety of several oil refineries, we understand that when a refinery has a maintenance turnaround, an industrial accident, the public’s not aware of those incidents around the state, yet the price of gas often will go up,” he said. “If you live in Fresno, you may be paying an increased price of gasoline….

“That’s not noticed to the public. So this idea that there’s not notice to the public just seems ridiculous. There was discussion for years about this program. And as we all know, the price of gasoline is volatile and is due to many different factors: market supply, demand, maintenance, all of these things.”

Not considered

Stanley Young, CARB director of communications, confirmed via email that the issue will not be reconsidered or agendized before January.

“We are moving forward with the program according to the timeline for its implementation that has been known to all stakeholders at least since 2011 when it was adopted by the board,” Young said. “The cap-and-trade program, including the element of putting fuels under the cap, has been discussed at length, and commented on over the last six years while the program was under development, including detailed comments by WSPA.  This includes public workshops and at least two meetings of the Air Resources Board.

“Two of California’s major economic sectors – industry and electrical generation – have been in the program since 2012. And it would be unfair for them to shoulder the burden of the program alone without also including the largest source of greenhouse gases in the state, namely the transportation sector – responsible for 40 percent of total greenhouse gas emissions.

“Moreover, to date 156 million [cap-and-trade] allowances for 2015, 2016, 2017 have been bought by companies that, knowing the timeline of implementation, considered the fact that fuels would come under the cap in January 2015 as designed.”

Also at the meeting, regional officials from around the state asked CARB for more time, funding and flexibility to meet the state’s greenhouse-gas emission-reduction targets. The state has been carved into 18 metropolitan planning organizations with different reduction requirements and deadlines depending on the size of the organization. It was a discussion item, so no action was taken.

With gas prices soaring again, consumers are rebelling. And even liberal Democrats in California are seeking to help their constituents.

Assemblyman Henry Perea, D-Fresno, spearheaded the writing of a June 16 letter signed by 16 Democratic assembly members to California Air Resources Board Chairwoman Mary Nichols. Separately, 26 Republican legislators have advanced a similar protest. The concern of the legislators is high future gasoline prices from the cap-and-trade emissions program on their constituents.

Cap and trade and its quarterly auctions of emissions allowances were instituted by CARB two years ago under the authority of AB32, the Global Warming Solutions Act of 2006. It limits air emissions by large industries and private electric utilities unless they “trade” pollution allowances above the allowed emissions “cap.”

Most of the new letter signatories represent low-income areas in Los Angeles, the Central Valley and the Inland Empire.

The letter highlighted something not well known: “AB32 does not mandate that CARB create a program that generates revenue for the state and it was not intended to be a funding mechanism for massive, new state efforts at GHG [Greenhouse Gas] reduction.”

Yet in the new state budget for fiscal year 2014-15, which began on July 1, Gov. Jerry Brown and the Legislature grabbed $250 million of cap-and-trade funds for the controversial high-speed rail program. That’s 25 percent of an expected $1 billion in cap-and-trade revenues.

The California Chamber of Commerce earlier this year filed a lawsuit contending the Legislature did not authorize CARB to raise revenue beyond the costs of administrating the cap-and-trade program. The outcome of that case is pending.

Gas price spike

Assemblyman Perea’s concern is that gasoline prices will rise by $0.15 per gallon next year from cap and trade and will increase each year thereafter.  Gas prices are expected to rise dramatically as the cap-and-trade program expands to include large fuel suppliers next year.  The Wall Street Journal cited a Boston Consulting Group study in 2012, predicting gasoline prices would go up between $0.49 to $1.83 per gallon by 2020 due to cap and trade.

An effort called “Fed Up at the Pump” has just been organized by the California Independent Oil Marketers Association to criticize this “hidden” tax on gas.

The largest number of long distance automobile commuters in the United States are from San Bernardino County to Los Angeles County at an average of 68 miles.  The higher costs would roughly add from $799 to $2,986 per year to gasoline expenses for an average commuter (assuming 20 miles per gallon fuel efficiency).  At the higher figure, that would be equivalent to a car payment each month for many lower-income workers.

Political crackup?

The Democrats are echoing the attitude of Jim Kellogg, himself a Democrat and former member of the California Fish and Game Council. He warned in 2010:

“I don’t doubt that there will be more green jobs in California, perhaps even thousands of them; however, we don’t want to put at risk the millions of well-paying, blue-collar jobs that put bread on the table right now. We need to make sure we do our homework, ask the tough questions and make adjustments as necessary to implement AB32  in a way that reduces greenhouse gases without hurting millions of families in this state.”

The Perea caucus letter signifies a continuing split in the majority Democratic Party between Hispanic politicians representing largely working-class areas — and the Bay Area Democrats who represent ultra-wealthy, Silicon Valley billionaires interested in greater environmental restrictions.

In 2013, Democrats started losing seats in the Legislature to Republicans in the Central Valley electoral districts with heavily Democratic and Hispanic constituencies over the different issue of “Fish versus Farmers.” Further unreasonable implementations of AB32 could further hurt working-class Hispanic voters, leading them to continue moving toward the Republican Party.

Jay McKeeman of the California Independent Oil Marketers Association summed up the looming higher gasoline prices:

“I think we all just kind of realized that there was no quarter given by CARB. At this late date, we don’t see out of the administration that there’s going to be an adjustment for this, so we’ve got to take it to the streets.”

Indeed, Neel Kashkari, the Republican challenger in the November gubernatorial race, has attacked what he calls Brown’s “hidden” gas tax. Kashkari’s bid remains a longshot. But if gas prices keep rising the next four months, he could turn the issue into one that makes the race too close for Brown’s comfort.

The 16 Democratic Assembly members signing the Perea letter:

Henry Perea, D-Fresno, 31^st District

Cheryl R. Brown, D-Inland Empire, 47^th District

Freddie Rodriguez, D-Pomona, 52^nd District

Rudy Salas, D-Bakersfield, 32^nd District

Susan Bonilla, D-Central Valley, 14^th District

Adam C. Gray, D-Merced-Central Valley, 21^st District

Isadore Hall III, D-Compton, 64^th District

Tom Daly, D-Anaheim, 69^th District

Jose Medina, D-Riverside, 61^st District

Christina Medina, D-Bell Gardens, 58^th District

Roger Hernandez, D-El Monte, 48^th District

Matthew Dababneh, D-Encino, 45^th District

Reginald B. Jones-Sawyer, Sr., D-Los Angeles 59^th District

Sebastian Ridley-Thomas, D-Los Angeles, 54^th District

Joan Buchanan, D-Contra Costa County, 16^th District

Jim Frazier, D-San Francisco Bay, 11^th District

On June 2, President Barack Obama announced his new rules to mothball “dirty” coal power plants so as to reduce carbon-dioxide power plant emissions by 30 percent from their 2005 level. He also set voluntary targets for the percentage of renewable energy in each state by 2029.

Coverage generally focused on Obama’s overall proposals rather their specific implications for individual states. But if Western states take Obama’s goals seriously, or if these goals are given some teeth, that could hurt California.

At first glance, it appears the Golden State would fare well under key sections of the president’s plan.

California has no large in-state coal power plants connected to the power grid. While several cities in Los Angeles County get their power from coal-fired power plants in Nevada, Arizona and Utah, their contracts expire by 2020.

There are 80 fossil fuel power plants in California that would be subject to 30 percent reduction in carbon dioxide levels from 2005. But normally, they would be retired by 2030 anyways and replaced with more energy-efficient natural gas power plants as well wind and solar power plants.

Furthermore, Obama’s 34.1 percent renewable energy target for California by 2029 seems oddly low. Because of state policies, California is already on course to reach 33 percent by 2020.

But the president’s much-more ambitious renewable energy targets of 91.7 percent for the state of Washington and 85.3 percent for Oregon may reduce cheap hydropower availability to California because these states might stop exporting to California — especially during cold snaps or heat waves. This could be devastating for a state energy grid that in coming decades will be forced to rely more on inherently less dependable wind and solar energy supplies.

California doesn’t count hydroelectric power as renewable energy under AB32, its Global Warming Solutions Act of 2006. However, the U.S. EPA’s draft new renewable energy targets for each state leave it open whether hydropower will count or not.

Washington and Oregon, however, would be prone to keep their cheap hydropower in-state to meet their high renewable energy targets. Today, Washington’s and Oregon’s hydropower plants produce 57 percent and 50 percent of their power, respectively.

EPA mandate may reduce some states’ advantages

A central focus of the debate over the AB32 state law is whether the higher energy costs it mandates for California in coming years will spur companies to go to cheaper states or nations. The term used in environmental and regulatory circles for this is “leakage.”

Cara Horowitz — executive director of the Center on Climate Change and the Environment at UCLA School of Law — says this concern has “been one of the motivations all along for California hoping it wouldn’t have to go it all alone. Leakage is a real risk to California if it continues to be well out in front on the climate change question.”

But if AB32-style mandates such as the EPA rule take effect, then “California becomes less likely to lose business to Texas,” she thinks.

Mary Nichols, chair of the California Air Resources Board, put it another way: “Requiring the use of renewable power and ‘energy efficiency’ is exportable.”

What she means by the term “exportable” is exporting California’s high electrical energy prices to other Western states that now have the competitive advantage of cheap coal, hydro or nuclear power.

States that generate enough electric energy to meet their consumption such as Washington, Oregon, Arizona, Utah and Texas would have to play by the rules of those Western states that are not self-sustaining: California, Nevada and Colorado.

By keeping the cost of electrical energy high like California in all Western states, there is less likelihood of “leakage” of not just companies but of population to states that no longer have the huge economic advantage of cheaper power.