HSR Is An Entirely Appropriate Use of Cap-and-Trade Revenues
January 16, 2014 by Source
By Robert Cruickshank/California High Speed Rail Blog
Governor Jerry Brown's proposal to use $250 million out of $1.3 billion in cap-and-trade revenues (that's 19%) for high speed rail is generating controversy. Very depressing controversy. That's because some environmentalists are recklessly attacking the proposal because it doesn't go toward meeting the 2020 greenhouse gas reduction goal. This is unusually bad politics and messaging for environmentalists, as they are now arguing against investments in long-term carbon emission reductions. The right and the climate deniers are going to have a field day with this.
One of the keys to this odd argument is the claim that cap-and-trade revenues are supposed to be used only to meet the 2020 goals. Problem is, that claim is entirely without evidence and is contrary to the truth – that they're to be used to get to the 2020 goals as part of a plan for long-term reductions that go to at least 2050.
That claim first appeared in 2012 from the Legislative Analysts Office, an office with a notorious record of presenting deeply flawed information designed to undermine the HSR project. Here's what the LAO said in April 2012:
Would Not Help Achieve AB 32′s Primary Goal. The primary goal of AB 32 is to reduce California's GHG emissions statewide to 1990 levels by 2020. Under the revised draft business plan, the IOS would not be completed until 2021 and Phase 1 Blended would not be completed until 2028. Thus, while the high–speed rail project could eventually help reduce GHG emissions somewhat in the very long run, given the project's timeline, it would not help achieve AB 32′s primary goal of reducing GHG emissions by 2020. As a result, there could be serious legal concerns regarding this potential use of cap–and–trade revenues. It would be important for the Legislature to seek the advice of Legislative Counsel and consider any potential legal risks.
Notice the weasel words used by the LAO. "The primary goal of AB 32″ but not its only goal. There "could be" serious legal concerns. There are "potential" legal risks.
As we will see, the LAO was just making all this up. There's nothing that I can find at all in the laws or the adopted cap-and-trade plans and regulations that limits the revenues to projects that reduce carbon emissions before 2020. In fact, what we find is the contrary: a long trail dating back to 2005 of an emphasis on long-term, permanent greenhouse gas emission reductions, and a trail dating back to 2008 of high speed rail being a part of those plans, including cap-and-trade revenues.
The point is that Governor Jerry Brown is on solid ground in proposing that 19% of cap-and-trade funds be used for high speed rail. Let's show how we reached that conclusion.
The first piece of evidence comes from June 2005. Governor Arnold Schwarzenegger issued Executive Order S-03-05 regarding climate change. Here's the targets Governor Schwarzenegger set out in that order:
1. That the following greenhouse gas emission reduction targets are hereby established for California: by 2010, reduce GHG emissions to 2000 levels; by 2020, reduce GHG emissions to 1990 levels; by 2050, reduce GHG emissions to 80 percent below 1990 levels
This is important because it establishes that from the very start, California GHG reduction policy has been oriented toward a long-term and lasting reduction, not simply to reaching a certain level of reductions in 2020, declaring victory, and going home.
In 2012 Governor Brown reiterated this long-term goal and added to it a specific reduction target for transportation. This was done in Executive Order B-16-2012:
IT IS FURTHER ORDERED that California target for 2050 a reduction of greenhouse gas emissions from the transportation sector equaling 80 percent less than 1990 levels.
In order to reach that target, high speed rail and its 10 million metric tons of CO2 reductions will certainly be required.
In 2006, the state legislature passed and Governor Schwarzenegger signed AB 32, the state's landmark global warming law. It includes a goal of reducing CO2 emissions to 1990 levels by 2020. But that wasn't its only goal. The point was to use the 2020 goal as a kickstarter to get the state to commit to lasting, permanent reductions:
It is the intent of the Legislature that the statewide greenhouse gas emissions limit continue in existence and be used to maintain and continue reductions in emissions of greenhouse gases beyond 2020.
The Legislature followed through on that intent by directing the California Air Resources Board to prepare a scoping plan that shows not only how the 2020 goal will be met, but how that reduction will be maintained beyond 2020.
Sure enough, in the summer of 2008 CARB developed and later adopted its scoping plan which includes high speed rail as one of its tools to achieve the lasting reductions required by AB 32.
From there CARB began developing its cap-and-trade plan. Nowhere in that plan is it said that its sole purpose is to achieve the 2020 goals and nothing else. The 2020 goals are surely their main focus, but not the sole focus, and the cap-and-trade plans were never intended to exclude long-term carbon emissions reductions. After all, the executive orders and the text of AB 32 were quite clear that the entire point of the exercise was to achieve lasting reductions.
In 2012 the state legislature passed a few bills relating to the use of cap-and-trade revenues, primarily AB 1532. This bill would govern how the funds in the Greenhouse Gas Reduction Fund would be used, directing the Department of Finance to develop a 3-year investment plan. Nowhere in this bill are the funds restricted solely to those things that would achieve CO2 reductions by 2020 – because again, the point of AB 32 and cap-and-trade is to make those reductions lasting.
Here is what AB 1532 does say about the funds:
(b) Moneys shall be used to facilitate the achievement of reductions of greenhouse gas emissions in this state consistent with this division and, where applicable and to the extent feasible:
(1) Maximize economic, environmental, and public health benefits to the state.
(2) Foster job creation by promoting in-state greenhouse gas emissions reduction projects carried out by California workers and businesses.
(3) Complement efforts to improve air quality.
(4) Direct investment toward the most disadvantaged communities and households in the state.
(5) Provide opportunities for businesses, public agencies, nonprofits, and other community institutions to participate in and benefit from statewide efforts to reduce greenhouse gas emissions.
(6) Lessen the impacts and effects of climate change on the state's communities, economy, and environment.
(c) Moneys appropriated from the fund may be allocated, consistent with subdivision (a), for the purpose of reducing greenhouse gas emissions in this state through investments that may include, but are not limited to, any of the following:
(1) Funding to reduce greenhouse gas emissions through energy efficiency, clean and renewable energy generation, distributed renewable energy generation, transmission and storage, and other related actions, including, but not limited to, at public universities, state and local public buildings, and industrial and manufacturing facilities.
(2) Funding to reduce greenhouse gas emissions through the development of state‑of‑the‑art systems to move goods and freight, advanced technology vehicles and vehicle infrastructure, advanced biofuels, and low‑carbon and efficient public transportation.
(3) Funding to reduce greenhouse gas emissions associated with water use and supply, land and natural resource conservation and management, forestry, and sustainable agriculture.
(4) Funding to reduce greenhouse gas emissions through strategic planning and development of sustainable infrastructure projects, including, but not limited to, transportation and housing.
(5) Funding to reduce greenhouse gas emissions through increased in-state diversion of municipal solid waste from disposal through waste reduction, diversion, and reuse.
(6) Funding to reduce greenhouse gas emissions through investments in programs implemented by local and regional agencies, local and regional collaboratives, and nonprofit organizations coordinating with local governments.
(7) Funding in research, development, and deployment of innovative technologies, measures, and practices related to programs and projects funded pursuant to this part.
High speed rail clearly fits these guidelines.
Sure enough, when CARB released its final investment plan for the cap-and-trade funds in May 2013, it mentioned high speed rail as part of the ongoing, long-term GHG reduction efforts – especially since the state is on target to reach the 2020 goals already:
Full implementation of existing State strategies will achieve the 2020 reduction target. However, extensive additional strategies are needed both to ensure ongoing maintenance of the 2020 limit – as population and related growth increase after 2020 – and to meet post-2020 goals.
Reaching the 2050 goal (80 percent below 1990 levels) will require far-reaching new approaches to how we plan our communities, how we move people and freight, how we power our State, how industries produce their products, how successful we are in treating waste as a source of energy, and how well we preserve California's lands and natural resources that sequester carbon.
CARB then goes on to list high speed rail as one of the strategies that will achieve those lasting reductions.
As a result, on page 25 of the final investment plan, high speed rail is explicitly listed as an investment priority.
That ought to be game, set, and match, but one more citation is worth briefly mentioning. CARB is currently updating its scoping plan to focus on the post-2020 reductions because, in their words, California is on target for meeting the 2020 GHG emission reduction goal and it's time to look toward the more ambitious goal of reducing carbon emissions to 80% of 1990 levels by 2050.
So the LAO's concern trolling from 2012 that I cited to open this post is not at all supported by any shred of evidence, and is in fact fundamentally contradicted by the relevant laws, executive orders, scoping plans, and investment plans that govern AB 32 and cap-and-trade. We can dispense with their argument here and now.
Sadly, environmentalists are still making an issue of this. Governor Brown is proposing to spend just 19% of cap-and-trade revenues on HSR. I'd spend more, but hey, that leaves 81% of the revenues for other projects.
High speed rail is an essential piece of California's carbon emissions reduction strategy. It is under attack from Tea Party Republicans, funded by oil money and climate deniers, who are adamantly opposed to doing anything to help reduce carbon emissions. HSR's perceived problems all stem from that Tea Party attack.
So why on earth would environmentalists help their enemies attack a major method of reducing carbon emissions? Why would they hand the right and climate deniers a new line of attack, that it's somehow inappropriate to use cap-and-trade funds for anything that lasts beyond 2020 when the entire point of AB 32 and cap-and-trade is to achieve long-term reductions?
I am truly stunned at this. California environmentalists should be smarter than this. They need to abandon these claims that it's somehow wrong for cap-and-trade funds to be used on HSR. And Governor Jerry Brown needs to stick to his guns on this, because he is absolutely right.
Let us hope that sanity, reason, evidence, and a commitment to permanent reduction of carbon emissions prevail.
UPDATE: California EPA Secretary Matt Rodriquez tells Capitol Radio that using cap-and-trade funds for HSR "is appropriate. Need long-term greenhouse gas reductions, beyond 2020 goal."
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