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ARB Chairman Mary Nichols sent the following letter today to
State Senator Dutton explaining timing and opportunities for
public comment on ARB staff economic analysis of AB 32. March 17,
2010

Honorable Bob Dutton
California State Senate
California State Capitol, Room 5094
Sacramento, California 95814

Dear Senator Dutton:

Thank you for your letter of March 1, 2010, expressing your
concerns about the implementation of AB 32 and the status of our
updated economic analysis.  As you may be aware, Air Resources
Board (ARB) staff will be presenting an updated analysis of
implementation of the Climate Change Scoping Plan at the March 25
Air Resources Board meeting.  We also plan to hold an all day
event for our Board in April that will allow interested parties
to participate in a panel discussion of ARB’s and other economic
analyses of the implementation of AB 32.  I would welcome your
participation in that discussion, and will share additional
information as the details for the event are developed.  

 

While your letter suggests that we are implementing the Scoping
Plan without consideration of the potential economic impacts, I
assure you that every regulation that comes to our Board has an
analysis with it that considers the economic costs and benefits
of that regulation.  While the Scoping Plan provided the broad
policy direction for achieving the goals that the Legislature and
Governor set for California in AB 32, the implementation of the
measures in the Plan is being done through the State’s formal
rulemaking procedures, including working with all stakeholders
during the development of the regulations and the analysis of
their economic and environmental impacts.  We have not and cannot
adopt regulations to implement any of the measures in the Scoping
Plan without a regulation-specific economic analysis.  

 

Last May, Environmental Protection Secretary Linda Adams and I
appointed the Economic and Allocation Advisory Committee (EAAC),
comprised of economic, financial, and policy experts with the
various backgrounds and experiences.  Part of our direction to
EAAC was to interact with and advise the ARB staff as the
economic analysis was updated.  Secretary Adams and I believe
that such an interactive peer review process is the best way to
ensure that the updated analysis is strong and robust.  ARB staff
has been working closely with EAAC since the committee was
appointed.  

 

As you note, the Board had requested the updated economic
analysis of the Scoping Plan by December 31, 2009.  However, last
November, the EAAC requested that its members and ARB staff be
given more time to complete the work.  The EAAC’s focus last
summer and fall was on the other task that we had given them –
providing recommendations to the Board on the distribution of
allowances and use of potential auction revenue within the
cap-and-trade program.  At the EAAC meeting on November 18, 2009,
Professor Larry Goulder, the chairman of EAAC, noted that the
EAAC members had, at that point, focused almost exclusively on
the allocation recommendations, and had not yet found the time to
focus on the updated economic analysis work that ARB staff had
underway.  He noted that while staff was on track to release an
updated analysis in time for the December Board meeting, he
believed that it would be prudent for the Board to allow staff
additional time to work with the EAAC members to produce a more
robust analysis that reflected the input and recommendations of
the economic experts on EAAC.  

 

Finally, I would like to emphasize that the work that California
is doing to implement AB 32 is helping point the way toward
investing in a clean energy future for California.  I firmly
believe that California’s investments in energy efficiency and
alternative fuels will help maintain our long-term economic
health by reducing our susceptibility to volatile oil and natural
gas prices.  As we look for ways to move out of the current
economic down-turn, it would be a mistake to lose this
opportunity for California to take the lead in creating the new
fuels and technologies that the world will need in coming
decades. 

 

Should you have any further questions or comments, please feel
free to contact Kevin Kennedy, Assistant Executive Officer at the
Air Resources Board, at (916) 322-6964 or kmkenned@arb.ca.gov.

 

Sincerely,

 Mary D. Nichols