In recognition of the risks for California associated with climate change and the accompanying need to take action, Governor Schwarzenegger signed Executive Order S-3-05 (EO) which set reduction targets through 2050.

• By 2010, Reduce Emissions to 2000 Levels. This represents a reduction of 59 million tons, or 11% below business as usual.
• By 2020, Reduce Emissions to 1990 Levels. This represents a reduction of 145 million tons, or 25% below business as usual.
• By 2050, Reduce Emissions to 80% Below 1990 Levels.

The EO also directed the Secretary for Environmental Protection to prepare a report to the Governor and the Legislature by January 2006 that defines actions necessary to meet these targets. Consistent with the EO direction, the Climate Action Team (CAT) was formed.

This CAT draft report—another version is due in late January—provides the outline toward meeting those targets, along with analysis of the potential effect of climate change on California in different scenarios.

The report divides its recommendations into those top five that it characterizes as essential and overarching, and then a second tier of general that consist primarily of recommended next steps and indications of where further analysis is needed.

The top five recommendations are as follows:

1. Mandatory emissions reporting, starting with the largest emission sources. As a basic requirement for tracking and accounting of emissions and emission reductions, it is essential that the State have an implementation inventory that builds upon California’s Climate Action Registry and allows the State to track progress.

   Currently, California has a planning inventory that has been developed by the Energy Commission and a voluntary registry, the California Climate Action Registry. Although both are valuable, neither of these provide the essential information needed to track emissions from the largest sources.

   The CAT recommends mandatory reporting starting with the largest stationary sources: the electric power sector, oil refining and oil and gas extraction, landfills, and cement production. Once reliable detailed data from these sources of emissions is available, the targets can be translated into a statewide emission cap for the 2010 and 2020 timeframes (and lay the foundation for a cap and trade program).

2. A public goods charge on petroleum. The revenue generated from this public goods charge would provide funding for key strategies that will reduce climate change emissions and reduce dependence on petroleum.

   Currently, transportation sources are uniquely excluded from public goods charges that apply to all other energy sources in the state. Californians use 30% less electricity per capita than the average U.S. citizen; this is partially due to the public goods charge on electricity, according to CAT.

   Climate change emissions from the electricity sector have decreased over the last 30 years. Californians benefit from building and appliance energy efficiency programs funded with the public goods charges on electricity and natural gas, which provide a net savings of more than $1,000 per household annually.

   The same cannot be said of petroleum use within the state: demand has skyrocketed. A public goods charge on petroleum would be a very effective, fair, and efficient means to address this.

   As in the other energy sectors, the proceeds would be reinvested to encourage fuel diversity, particularly to encourage the use of biofuels, in the transportation sector and provide incentive funding for reductions in climate change emissions from other transportation sources. These include ports, heavy-duty trucks, and off-road transportation sources such as locomotives. Both economic and environmental benefits to consumers would be considered in the allocation of funds.

3. A coordinated investment strategy for State funding programs. The State would modify funding systems, the public pension system, the Public Interest Energy Research fund, and other State investment programs to reflect the commitment and recognition of the many benefits of a low-carbon footprint.

   The investment strategy would be designed to provide incentives for industry to develop emission reduction technologies. These technologies could be used in California and exported. They could be used to promote efforts at California universities to explore technological and strategic solutions to reducing emissions.

4. Expansion of University efforts to train technicians.

5. Early action credit to California businesses. The State should ensure that companies that have been proactive in reducing climate change emissions are not penalized.

   As the State develops climate change emission reduction policies, proactive companies must be recognized for their efforts. California businesses have requested the State to take action to support the transition to federal and international emission reduction schemes, including a cap and trade program.

   The Northeast states are nearing completion of a cap and trade program, and California’s companies should be able to participate in joint actions leading to a national and international cooperative effort.

The general recommendations are broken into broad categories as follows:

• Economic Analysis (by November 2006)

  • Complete an analysis of the individual strategies to determine the cost-effectiveness for each strategy.

  • Develop a revised macroeconomic impact assessment to include updated cost estimates for the individual strategies.

  • Determine updated costs associated with the impacts of climate change on public health, water, agriculture, coastlines, and forests in California.

  • Determine updated costs associated with adaptation.

• Climate Change Emission Inventory. It is essential that the California Energy Commission continue to refine the planning inventory they currently keep.

• Cap and Trade

  • A cap and trade program should be considered further as an integral part of California’s approach to reducing climate change emissions. In the absence of national action, California can lead by example by developing a cap and trade program as a model for national action.

  • Cap and trade program alternatives should be defined in detail and evaluated in terms of impacts on emissions; costs of reducing emissions; state competitiveness, businesses, and jobs; impacted communities with environmental justice concerns; and administrative and budget requirements.

  • Legislative authority required to implement a cap and trade program should be identified.

• Scenario Analysis

  • California should continue to support research relevant to policy on climate change, including support of the research activities of the California Climate Change Center.

  • Some of the areas of research in need of attention include the study of ecological impacts, the development of probabilistic climate projections for the state, a geographically-detailed analysis of the impacts of sea level rise on the California coast and the San Francisco Bay and Delta, the impact of climate change on energy generation and demand and human health, and new methods for economic impact analyses.

  • Future scenario analysis should strive to identify potential impacts on the most vulnerable groups in our society—including children, the elderly and frail, and residents in low-income and minority communications—and suggest solutions.

  • California should expand its support of climate change research to create the tools, methods, and information that will be needed to develop robust coping and adaptation strategies in the state.

The report’s recommendations are not binding; action must be taken by the legislature and the governor.

Resources:

• DRAFT Climate Action Team Report to the Governor and Legislature

• Climate Action Team Reports to the Governor and Legislature