The California Carbon Market: Can Public Policy and Private Sector Interests Successfully Coexists?

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Toni Symonds, Senior Policy Advisor - California State Legislature - United States

Toni Symonds, Senior Policy Advisor - California State Legislature - United States

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  • 1. The California Carbon Market: Can Public Policy and Private Sector Interests Successfully Coexists ? Triple Bottom Line Investment Conference November 14-16, 2007 Paris, France Presentation By: Toni E. Symonds
  • 2. The Proposition California’s Challenge Can public policy and the private sector both succeed? Can a carbon market be designed and implemented that is based on prosperity and better choices? Or will old “business v. the environment” battles doom carbon markets to failure? Climate change and the drive to transition to a less carbon intensive economy represents significant challenges to the economic, social, and environmental well being of the planet.
  • 3. Who is California?
    • 35 million people live in California – 12.5% of the U.S. population.
    • Eighth largest economy in the world - $1.7 trillion
    • Dramatically shifting demographic profile – baby boomer retiring and Hispanic population rising
    • Ninth largest emitter of GHG in the world
    • Despite improvements in efficiency and voluntary reductions, GHG emissions continue to increase – California’s growth is a significant contributor
  • 4. California’s Risks
    • Higher costs of energy
    • Reduced reliability of access to electricity
    • Reduced snow pack – access to water
    • Higher sea levels
    • Increased severe weather patterns
    • Increased temperatures
    • Pandemics
    • Shifts in habitat
  • 5. Public Policy Tools
    • Carbon Trading
    • Tax rates, credits, & deductions
    • Local development incentives
    • Depreciation schedules
    • Grants, loans, guarantees, & rebates
    • Construction and design standards
    • Professional licensing standards
    • Disclosure requirements
    • Connection authority to public facilities
    • Government purchasing power
  • 6. California Early Response
    • California Environmental Goals and Policy Report
    • California Climate Action Registry
    • Renewable Portfolio Standard for investor owned utilities
    • Statutory GHG reduction targets – Meet 2000 emission levels by 2010, 1990 emission levels by 2020, and 80% of 1990 levels by 2050
    • In process of adopting regulations, programs, and a carbon trading platform
    • Member of the Western Climate Initiative
  • 7. Global Drivers of Business
    • In the 1970’s individuals held 80% of U.S. equities
    • By the 1990’s the trend had reversed. In 2002, institutional owners held over 55% of U.S. equities
    • Different from individuals, institutional owners operate as fiduciaries
    • Large fiduciary institutions are sometimes called ‘Universal Owners”
    • Universal Owners need both long-term and short- term returns, appropriately risk adjusted, to meet their fiduciary responsibilities
  • 8. Investor and Business Risks
    • Access to insurance
    • Cost and access to energy
    • Shifting supply chain economics
    • Increased regulatory controls
    • Higher sea levels
    • Increased severe weather patterns
    • Increased risk of pandemics
    • Lack of corporate long-term planning
  • 9. Traditional Investor Tools
    • Corporate engagement
    • Investment policies
    • Sponsor and support resolutions
    • Selection of members of the Board of Directors
    • Compensation package approvals
    • Direct company engagement
    • Divestment (last resort)
  • 10. Investor Early Response
    • Carbon Disclosure Project
    • Investors Network on Climate Risk
    • Multi-investor campaigns on climate related resolutions
    • Green and climate related initiatives – including new actions for adding investments to their portfolios and managing existing portfolio
  • 11. Case Study: California’s Carbon Market
    • Command and control v. free market
    • Initial inventory and setting baseline
    • Allocate or auction credits
    • Set the territory of the credit market
    • Third party verification and tracking
    • Counting v. accounting for GHG reductions
  • 12. Presented By:
    • Toni E. Symonds
    • Chief Consultant, California State Legislature
    • Assembly Committee on Jobs, Economic Development, and the Economy
    • State Capitol, Sacramento 95814
    • (916) 319-2090
    • [email_address]