Just months after California Gov. Arnold Schwarzenegger (R) signed Assembly Bill 32 into law, setting a target of a 20 percent reduction in emissions by 2020, the governor announced a plan to reduce emissions in the transportation sector by focusing on fuels. Are the targets set by the California government too aggressive? Could these plans work on a national level? During today's OnPoint, Dan Skopec, undersecretary of the California Environmental Protection Agency, talks about how California's plan to reduce emissions could be implemented throughout the country. Skopec discusses how Congress is reaching out to California officials for guidance on emissions legislation. He also addresses critics' concerns that the goals set in A.B. 32 are too aggressive.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Dan Skopec, undersecretary of the California Environmental Protection Agency. Dan, thanks for joining me.
Dan Skopec: Thanks for having me.
Monica Trauzzi: Dan, California recently announced a plan to reduce emissions in its transportation sector. It's called the Low Carbon Fuel Standard or LCFS. It doesn't focus on vehicles though. It focuses on the fuel. Explain what California is trying to do here and how exactly you plan on achieving your goals.
Dan Skopec: Sure. Well, as you may know, last year we passed the Global Warming Solutions Act which required that California reduce its global warming emissions about 25 percent by 2020. And one of the leading sectors of the greenhouse gas emissions in California is the transportation sector. We knew that one of the first steps we had to take to address that was to tackle emissions from transport and on the fuel side. So we went about thinking about what the best way to do that is. And we determined that instead of focusing on particular fuels, which is what most policymakers worry about, we thought we should focus on the carbon content at those fuels. So the Low Carbon Fuel Standard dictates that the carbon content of fuels in California need to be reduced ten percent by 2020. We don't care what the name of those fuels are, we don't care how you bring them in, we just want to make sure that people are delivering low carbon fuels to California.
Monica Trauzzi: And it's not that customers will have a choice at the pump, whatever they fill up with will be lower in carbon.
Dan Skopec: Yeah, and so we include a flexible compliance system within this so that fuel producers that are having difficulty complying with this, could potentially buy credits from other fuel producers that can supply lower carbon fuels. And we say the word fuels and people usually think liquid that you pump into a tank, but it's going to be other things as well. It's going to be hydrogen. It's going to be electricity. It's going to be a host of different types of fuels, even some fuels that we're not aware of today. So we're going to see, hopefully, more plug-in hybrids. We're going to see more biofuels. We're going to see more hydrogen vehicles and we're going to see, hopefully, lower carbon fossil fuels.
Monica Trauzzi: What do these standards mean for the ethanol industry? We don't have the technology for cellulosic yet. Is this going to put a strain on the ethanol industry?
Dan Skopec: Well, actually, I think it's a great boost to the ethanol industry because they are one very viable alternative fuel. But over time, they're going to have to reduce their carbon emissions from the typical or average emissions from ethanol today. Ethanol that's produced from the Midwest, from corn with coal-fired electricity and then trucked or sent on a train to California actually doesn't reduce greenhouse gases that much. And it's important to note that we're going to evaluate the carbon content on a full life cycle basis, meaning from the very beginning of the production process until the time it goes out the tailpipe. So when you take into all that account, corn based ethanol is actually not that much lower in terms of greenhouse gas emissions, but cellulosic ethanol will. Corn ethanol, that's produced in California, is about 30 percent lower than in the Midwest because you don't have the transportation, because we have a cleaner electricity supply, and because we feed our cornmeal wet to our dairy cows as opposed to trying it and shipping it out. So there's different processes that can be made to improve ethanol, but ultimately I think cellulosic ethanol has a great market here in California.
Monica Trauzzi: In his State of the Union address the President called for a 20 percent decrease in gasoline consumption over the next 10 years. And this came on the heels of California's announcement about the LCFS. Are the two plans similar and do they both have the same goals of reducing emissions?
Dan Skopec: They're similar in one respect, they both address petroleum dependence. And so we applaud the President for aggressively addressing that problem. But the other problem is the greenhouse gas emissions that come from petroleum-based fuels in the transportation sector. And we think that the President's plan didn't address that appropriately. The definition of alternative fuels, according to the law, could include things like coal to liquids and other types of petroleum-based fuels that are defined as alternatives but they're really very damaging in terms of greenhouse gas emissions, including the discussion we just had about ethanol. There's different ways to make ethanol. So if you don't have a carbon criteria on these fuels you could actually be going backwards in terms of overall greenhouse gas emissions. And so our policy, with the Low Carbon Fuel Standard, ensures that you have a declining amount of carbon in that fuel and I think that's a more appropriate policy.
Monica Trauzzi: California Senator Barbara Boxer is now the head of the Senate EPW Committee, but she's already scaled back on her efforts to implement a California-like standard around the US. How much of an impact do you think she's going to have on the types of legislation we see regarding emissions? And will she be able to push that California-like standard?
Dan Skopec: Well, I think she's going to certainly be one of the key players in the Senate, without a doubt. And she has said to us, and she said publicly, that California is the gold standard and to the extent that she can she's going to try to achieve something similar to what California did. How successful she is going to be is going to be determined by the rest of the Senate the course. We all know that the rules in the Senate mean you have to get 60 votes to pass anything and there's a lot of coal state senators out there. So the coal issue is going to have to be addressed, without a doubt. But I know that Senator Boxer and Senator Feinstein are going to be fighting to promote a program similar to California's.
Monica Trauzzi: Beyond whether it would be successful in the Senate or not, do you think a program like that could actually work around the country? Could these standards be implemented around the country and work effectively?
Dan Skopec: Well, the Global Warming Solutions Act that California passed is somewhat light on details and much more so framework trail. It sets the governor's goals into statute that we should get back to 1990 levels by 2020. But it leaves a lot of implementation up to the executive branch agencies. A similar goal set by Congress with the implementation left up to the U.S. EPA for whether to take regulatory approaches or to employ a market approach, I think could work for the rest of the nation. We've already seen Europe employ a market approach and they're having some success with that as well. So it's possible. It doesn't have to be exactly like the bill we passed, but the key is you have to establish goals. And by goals we mean caps on emission.
Monica Trauzzi: So all things considered, which piece of legislation that's out there right now would you most support?
Dan Skopec: Well, we support action. I mean it's beneficial to California, but it's beneficial to the rest of the world for the United States to get in this game and could get active. So we're thrilled to see that Congress is starting to move in this direction. There's a lot of great ideas out there. It's going to be a wonderful debate and we hope to help all the parties, that are engaged in that debate, take some action.
Monica Trauzzi: So would something like Senator Bingaman's bill, which perhaps isn't as stringent as Senator Boxer's bill, would that still be something that you would support and accept?
Dan Skopec: Well, we want to make sure that whatever action the federal government takes is aggressive enough to address the global problem. I mean that's really what we have to keep our eyes on. So we're going to be encouraging that, but we also understand that Congress is an interesting process and there's always a negotiation and a compromise at the end of the day. And it may be the case that the federal government doesn't go as far as California, but it doesn't mean that we can't continue to lead in these efforts as we have done with things like emission tailpipe standards, lower carbon fuels, energy efficiency standards, renewables. We're going to keep doing those things in California. I think that those will slowly get adopted across the country.
Monica Trauzzi: Talk a bit about the working relationship that you have the Congress now. How much are they reaching out to you? And how much are you talking to environmental groups in DC? How much of an impact as California trying to have?
Dan Skopec: Well, we want to be very engaged and we want to be helpful. And so we have a delegation here in town this week that's been meeting with a lot of members of Congress, members from the National Governor's Association, different embassies, different media outlets and environmentalists. You know, we've passed our bill in California, we're in the implementation phase, so there's still a lot of things that we're learning, but we want to share what we've learned with members of Congress and others. And so we're really eager to be helpful and we're also learning as we go along in our process from people like the United Kingdom or Sweden or Japan. There's a lot of learning around the world that needs to happen on this and we're kind of in the middle of it.
Monica Trauzzi: Like you said, you're in the implementation phase of A.B. 32. Critics of it though would say that it might be tough to meet the target, the timeline target. And whatever happens this year will pretty much determine whether you'll be successful in meeting that target. Do you think you'll be able to meet that timeline?
Dan Skopec: Yeah, I do. It's an aggressive target. I mean the governor is a very bold, ambitious person and he set a very aggressive target for us. But unless you set that target and you set your government agencies on focusing on that you'll never get there. But I have full faith and the California economy and the California industries that they're going to innovate and they're going to develop ways to meet that target. So we're very confident, but it means we have a lot of work to do between now and whenever our program begins.
Monica Trauzzi: California officials met with the EU last week to discuss how to bring the state into the E.U. trading scheme for carbon. Why has California decided to reach out internationally and not put all its focus on national efforts?
Dan Skopec: Well, the governor was very clear to us after the bill was passed that he wanted us to develop a market-based mechanism, cap and trade is one type of market-based mechanism, because he believed that that was the most efficient way to reduce greenhouse gas emissions. Not that he wanted us to do that exclusively, we'll also be employing some regulatory approaches, but he certainly believed that we needed to have a market-based element to our plan. And Europe has the only functioning carbon market in the world today. So we recognized that that's where the expertise was, that's where the experience was. So this summer Tony Blair visited California, and the governor and he formed an agreement to help develop these programs. And we're reaching out to members of the E.U. as well to learn from them. Once the United States have a program we will certainly be doing the same thing. But at the moment Europe is the leader on this and we're following their lead to some extent.
Monica Trauzzi: Final question, what else can we expect from California down the pipeline? What other efforts will be made on the climate change front?
Dan Skopec: Well, I think you're going to see increasing focus on things like energy efficiency, on renewables, on more advanced vehicles and then the Low Carbon Fuel Standard. I think you're going to see a lot of different regulatory approaches, but I think the most significant thing we do is our effort to develop a well functioning market because it could be a model for national market. And there's a lot of challenges in doing that. It's not an easy endeavor. So we hope that we can provide a path for the federal government when it gets ready to do so.
Monica Trauzzi: Ok, we'll end it there Dan.
Dan Skopec: All right.
Monica Trauzzi: Thanks for joining me.
Dan Skopec: Thank you.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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