Wednesday, December 22, 2010

California Air Resources Board's pantomime of policy making

California regulators were patting themselves on the back last week, after adopting the state’s first cap and trade scheme. But do they really have much to celebrate from this pantomime of policy making? During a 10-hour public hearing, 200 members of the public each delivered 2 minutes of comment on the regulations.

As comedy performances go, the Californian Air Resources Board (Carb) won’t be winning an Emmy any time soon. But this style of open democracy to create historic legislation may end up making a joke of California’s climate policy.

It was a town hall meeting on a grand scale, with the rest of the US and the world watching to see what would happen in the final days before the deadline for adoption on 1 January.

I am new to observing US democratic processes first hand, but I’m told that this kind of town hall meeting in policy making is fairly standard. In many ways it appears to be a great idea, but during that marathon meeting, the air resources board often appeared woefully out of its depth, and there is no doubt that it has had to exceed its expertise and competences since the Environmental Protection Agency cannot get its hands dirty with climate legislation.

Arnold Schwarzenegger made a cameo appearance to rally the troops to adopt the AB32 legislation he signed off way back in 2006, and praised them for their hard work in marrying together such a diversity of opinion in industry and the public with cap and trade laws. 

“I know what it’s like,” he said, “having to compromise when we have differences of opinion because I’m married. 

“I’m so proud of this team here. It’s one thing for the legislators to give you this document, AB32, that’s 1,000 pages long. But someone has to follow through and make it a reality and the people you see here before you have made this a reality. I know that we will have a 25% reduction of GHGs by 2020 but only because I have an excellent team here.

“Thank you for sitting here and participating in this process. That’s what I love about this country, everyone gets together, everyone is heard. I know you have some concerns but express it, let’s talk about it.”

So who was doing the talking? The board heard from forest campaigners who didn’t want timber companies clear cutting trees where they lived (more about that in the second part of this blog, when I have heard back from the Carb on some crucial points). Oil companies, manufacturing associations, trade bodies and non-profits all sent their people in to nod their assent to the scheme as a whole, while raising their own particular concerns on everything from benchmarking, verification, allowance allocation, offsets and racial equality.

Kate Beardsley, climate change manager at PG&E, said: “Some have used the analogy of a marathon to describe the undertaking of the board. But I would say the board has been through an ironman endurance test.”

But, she admitted, there was still work to be done, and programme monitoring, cost burdens to the consumer and mandatory reporting rules were all areas of concern.

Frank Harris, an environmental economist employed by Southern California Edison, echoed Beardsley. “We support the cap and trade scheme but we are concerned that the proposed rules are extremely complex and not adequately tested. We suggest the board takes time to get this right on some crucial readiness tests.”

There were fewer Tea Party members among the “ordinary folk” than expected. But Austin Ford, from Amador county, said that California’s leadership was already “a source of humour” both nationally and internationally and warned the board not to make the state into a laughing stock.

Pam Pinkston was the only “ordinary housewife” to speak. “There is not an area of my life that is not negatively impacted by AB32,” she said, comparing the cap and trade scheme to a Ponzi scheme just to make money from carbon trading. 

But she implored, CO2 was good for plants so how could it be bad for the planet. “What next? A tax on human exhalation? This is no more than a load of hot BS out of the behinds of the board.”

The board members were then called on to make their comments, and to resolve to change or adopt the regulations, most of which had been submitted in writing before the meeting.

What followed was like a supermarket sweep of ideas, where the board drew up a shopping with a list of ideas they rather liked – or didn’t like –from the 200 they had heard that day. We hear a lot about retail politics in the US, this was retail policy making. Sandra Berg seemed rather pleased with her “laundry list longer than Santas gift list.”

They’d bounce ideas around the other board members, trying them on for size, like teenagers in a changing room on a shopping trip without the parents. 

It appeared to be a process too random to be credible. Had the board members really had enough time to consider the comments? Some of issues had serious implications for the final shape of the cap and trade scheme that we will see in July next year. Where complex ideas were presented to them, had they sufficient advice from a competent technical staff? I would welcome being proved wrong, and therefore reassured.

If a board member said anything too complex it was deferred to the technical staff, who, on occasion seemed weak in their responses to some crucial questions.

The grasp of some basic concepts appeared to allude the board who were no doubt highly qualified – in the wrong subjects. Where were the economists or scientists, or anyone else with deep level understanding who might have made a difference? 

Ron Roberts, for example, raised a point that he really should have known about while trying to make a point about leakage. 
He said: “Earlier I mentioned the research we have going on that are doing basic research, like the algae people, who are pumping CO2 and helping us grow the algae and everything and are certainly pumping out a fair amount of CO2 into the atmosphere. How are we going to deal with these because it just seems like we’re patting ourselves on the back, we’re California and everything wonderful is going to happen here, and the reality is we set up all these rules to make it difficult and create negative incentives. It’s real easy to move that research.”
As Mary Nichols hesitated to correct Roberts, a member of the technical staff interjected: “They’re not combustion emissions, they’re not part of the programme.”

It was a shame, as Roberts had earlier made a serious point about verification which was slapped down by Nichols – the second time she had slapped down a serious obstacle to wholesale adoption of the regulations.

Technical staff had already changed the verification rules for reporting and offsets, which some verification organisations and standards bodies claimed undermined the scheme. But the certification of verifiers was still an area of contention, which exposed the scheme to substandard monitoring, they said.
“We would expect the eventual language in the cap and trade regulation for verification of offsets to mirror very closely what we put out for recording verification. There were other issues raised today in terms of how we do the certification of verifiers. And I don’t know whether we’ll be able to say anything on that tonight. We might be able to come back and say more in the morning. It is an issue…”
Nichols then cut him off: “We’re not coming back in the morning. I do not detect a desire to come back in the morning, we want to get this resolved tonight.”

Christmas came early for Nichols and she got her gift from Santa's list, as only one board member, John G Telles who was visibly fuming, dared vote against the regulations. After four long years battling with industry, special interests and the public to pass the United States’ most wide ranging cap and trade rules, Carb just wanted to get shot of it all and adopt the regulations whether they agreed with them wholesale or not. Nichols and her board, after all, had a party to go to at Governor Schwarzengger’s house.

If cap and trade fails to replicate economic benefits found (after trial and error) in the EU, this American approach to regulation  - let's throw it out there and see what happens - may be the undoing of the most important piece of climate legislation to come out of the US to date. It would be a shame to see the fruit of Nichols' work fail to flourish because she, and the policy process, did not demand enough detail to create certainty for the 350 installations to be capped in 12 months' time.

After the meeting Nichols confirmed she was staying on as chairwoman under incoming governor Jerry Brown. But if she wants a job pushing through legislation no one can agree on without worrying too much about the detail, maybe the UN should make room for her at its climate negotiating table.

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