STATES:

Mexico's president is coming to Calif., and climate may be on the agenda

SAN DIEGO -- There's a possibility that California and Mexico could form a partnership on climate issues, Air Resources Board Chairwoman Mary Nichols said here yesterday.

Mexican President Enrique Peña Nieto is planning a trip to California, and his administration is conferring with Calif. Gov. Jerry Brown (D)'s office, Nichols said.

"We are talking with them about a variety of different areas of engagement," Nichols said during an interview after she spoke at the Climate Leadership Conference here. "We have a lot of common interests."

Brown earlier this month said he was seeking to work with Mexico on global warming.

"We're going to reach out to Mexico," Brown said after a Los Angeles meeting with members of President Obama's Task Force on Climate Preparedness and Resilience, "We're doing everything possible. Is it enough? No, it's just a teeny response in the face of what is a tsunami of atmospheric change" (ClimateWire, Feb. 14).

It's the latest outreach as California looks to team with other states and nations on addressing global warming. The Golden State and China last year penned an agreement to work on emissions trading. California later signed a memorandum of understanding with Oregon, Washington and British Columbia on partnering on attaching a cost to carbon pollution (ClimateWire, Nov. 5, 2013).

Asked if such an agreement could exist with Mexico, Nichols said "there is a chance of an MOU, absolutely," referring to a potential memorandum of understanding on climate actions between the two countries.

"We would begin with an MOU on working together with our program, sharing information, developing a common understanding of what we need to do," Nichols said. "Then we would proceed to other, more formal kinds of linkages."

Brown spokesman Evan Westrup declined to provide details of Peña Nieto's visit, saying that "a discussion on these matters would be premature at this point." Nichols didn't know the exact time frame but said it's "in the fairly near future."

Nichols said she likely "will have the opportunity to be part of some conversations" with Mexico's president if he does come to the state. Nichols has traveled to China to meet with officials there on climate.

She was in China when it launched its emissions trading system, Nichols said during her conference panel discussion, and "people were carrying around Chinese-language versions of [California climate law] A.B. 32."

Pacific Northwest states working on CO2 policies

In terms of the MOU with Oregon, Washington and British Columbia and what's next, Nichols said that "these are conversations that are going on at the level of governors' offices," while ARB staff members have had talks with their counterparts in the other states.

"There's not any kind of a formal negotiating process going on at the moment," Nichols said.

On the timing of Washington and Oregon starting carbon-limiting policies, Nichols said that "they've both already said they intend to do it. What they're working on is the implementation methods."

"They have the political will and the recognition of the issue" but have to work within the politics of their states, she added. "They're both anxious to move, but they also have elections like everybody else does. Things have to be done around the cycles that are possible in your own political system."

The Golden State is in the second year of its economywide cap-and-trade program, which requires utilities and industrial facilities to submit permits along with tallies of their greenhouse gas pollution.

During a session at the conference, Nichols was asked about the possibility that California might team up with states that are part of the Northeast's Regional Greenhouse Gas Initiative, or RGGI.

She said that "RGGI and California have had dialogue together over many years" and that the Golden State "learned a lot from RGGI" when setting up cap and trade.

But there's a major hurdle to joining the markets, she said.

"I don't think it's likely that our two market systems would link with each other ... the differential in price is so great," Nichols said.

At RGGI's auction in December, 38,329,378 allowances sold for a clearing price of $3. California's most recent auction of greenhouse gas credits saw prices of $11.48 per ton for allowances covering the current year's emissions (ClimateWire, Feb. 25).

Nichols, during her climate panel discussion said that the California is on its way toward meeting the goals of A.B. 32, which required the state to lower carbon emissions to 1990 levels by 2020. But the need for reductions doesn't stop then, she said.

Nichols said that she isn't sure how the state will reach its goal of shrinking emissions to 80 percent below 1990 levels by 2050, necessary to keep warming below an increase of 4 degrees, which would be "a catastrophe."

But she said, "We have a lot of faith in our ability" and in other people's ability to develop new technologies.

Carbon tax debated

In an interview, Nichols renewed her previous criticism of California Senate President Pro Tem Darrell Steinberg's (D) proposal to adopt a carbon tax in lieu of expanding cap and trade next year to include transportation fuels.

Last week, Steinberg said he would offer legislation and that he wanted to launch a conversation about a broader tax reform movement (ClimateWire, Feb. 21).

"Senator Steinberg sought to engage constructive thought," his spokesman, Rhys Williams, said in an email yesterday. "That's vital as California seeks to set a climate strategy through 2050, where we have to broaden the coalition on combating climate change to include those fighting against income inequality."

Nichols, however, said that "we have a rule in place that has fuels under the cap. The rule has been adopted, and it's being implemented right now."

She noted that future-year carbon allowances -- those that can be submitted in 2015 and 2017 -- are selling at auction and that some of the buyers might be fuel companies coming under the cap next year.

Nichols noted that when California's climate law A.B. 32 passed in 2006, the Legislature opted not to pursue a carbon tax. "Since they didn't, we had to develop a cap-and-trade program to achieve the results" required under A.B. 32, Nichols said.

Steinberg was not a member of the Legislature in 2006, Williams noted.

"Regardless, it is important for the Legislature to reassess and be introspective," Williams said. "It's also worth noting that back in 2006, there was a real preference within the environmental community for a carbon tax, but it was not seen as politically possible under Governor [Arnold] Schwarzenegger [R]."

Steinberg has introduced his bill, S.B. 1156. It proposes a carbon tax "of an unspecified amount per ton of carbon-dioxide-equivalent emissions on suppliers of fossil fuels." Revenues raised would be deposited in a Carbon Tax Revenue Special Fund.

The bill would state that it was "the intent of the Legislature that revenues from the carbon tax be rebated to taxpayers, particularly low- and medium-income taxpayers, of other taxes, and for implementation of the carbon tax to be revenue neutral."

The measure further would "exempt suppliers of fossil fuels subject to the tax from regulations imposed by the State Air Resources Board under" A.B. 32 relative to the complying with cap-and-trade rules.

Nichols said that she is "personally of the view that California's tax system could use some revision, and I'm very attracted by the notion of an earned income tax credit as a way to improve equity." But, she said, the state has lacked the revenue for that policy.

"I don't think the connection between carbon reduction and tax reform is very straightforward," Nichols said.

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