Prospects for the California Emissions Market, with Dallas Burtraw

Notable Quotes

• Origins of the cap-and-trade program: “The program was authorized in 2006 by Governor Schwarzenegger, a Republican governor, and it was just one line, if you will, out of a small but famous piece of legislation called AB-32—many people know it by that name. The cap-and-trade program took effect in 2013 and 2014 for electric utilities and industry, and then in 2015, it was expanded to be economy-wide, covering transportation and home-heating fuels, etc. … California’s emissions reduction goals apply economy-wide, and the trading program constitutes one major portion of the state’s overall efforts to achieve that outcome.” (4:09)
• Market challenges for cap and trade: “The somewhat sobering finding is that there are 321 million allowances that reside in private accounts. This is greater than the annual issuance of new allowances and greater than the projected emissions reductions that would be achieved by 2030, under the declining emissions cap at 4 percent per year. So it looks like, while there are these very ambitious goals, there’s also this large bank of allowances that could come back into the market and enable greater emissions. And, further, there’s another 274 million allowances in public accounts that would reenter the program if the prices rise to a level that triggers a release of allowances. So, this poses—I don’t want to say a dilemma, but a question as to how much the cap-and-trade program is going to be able to contribute to achieving the state’s overall, legally mandated goals.” (14:00)
• Uncertainty in markets hurts investments: “We have given some careful thought to questions of what to do if there’s a problem and the market needs to be reformed through some adjustment to allowance supply. And we identify, fundamentally, two different approaches: One would directly address the cumulative supply of allowances that are available in the emissions market; for example, just by reducing the number of allowances that enter the auction … But the disadvantage of this approach is that it could offer a market surprise. And the problem with a market surprise is the possibility that there could be other surprises that introduce regulatory uncertainty. It could undermine the working of the market overall, and it can appear somewhat arbitrary from an investor’s perspective. So, a second approach would be to address the price of allowances by increasing the price floor—or better, perhaps, to add one or multiple additional price steps.” (18:05)

Top of the Stack

• Independent Emissions Market Advisory Committee (IEMAC) in California
• “2021 Annual Report of the Independent Emissions Market Advisory Committee” by Dallas Burtraw, Danny Cullenward, Meredith Fowlie, Katelyn Roedner Sutter, and Ross Brown
• In the Struggle: Scholars and the Fight against Industrial Agribusiness in California by Daniel J. O’Connell and Scott J. Peters

The Full Transcript

Kristin Hayes: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future (RFF). I'm your host, Kristin Hayes.

My guest today is Dallas Burtraw, RFF senior fellow and chair of California's Independent Emissions Market Advisory Committee, or IEMAC. IEMAC was a body created by legislation several years ago to help the state of California examine and refine its cap-and-trade program for reducing greenhouse gas emissions. We've been looking at opportunities to get Dallas on Resources Radio for some time. He's a tremendously prolific researcher, so I'm really glad that we're making it happen today and in the context of this important work for IEMAC.

So today, Dallas and I are going to take a deep dive into the world of California's carbon market with a particular focus on IEMAC's recent report and recommendations to the California Air Resources Board. As Dallas wisely noted to me going into this recording, given the size of California's economy and the sophistication of its policy designs, many other jurisdictions worldwide watch closely to see how things are faring in the state. In other words, California's climate policy success matters on a global stage. Stay with us.

Hi Dallas, and welcome to Resources Radio. It's really nice to talk with you today.

Dallas Burtraw: Hi, Kristin. Good to be here.

Kristin Hayes: Great. Well, since this is your first introduction to our listeners—although I imagine many of them have read or heard your name elsewhere—but still, let's start with an introduction. I'd love to hear more about your background and your interest in environmental economics. Tell us a little bit more about yourself.

Dallas Burtraw: Well, my graduate school training was at the University of Michigan, where I had a master's in public policy and a PhD in economics, but I grew up in California. And a pivotal experience that moved me into environmental economics occurred when I was at UC Davis in the 1970s as an undergraduate.

PG&E—the utility that served Northern California at the time—proposed the 1,600-megawatt, coal-fired power plant to be built in the San Joaquin Delta. Now, in retrospect, this proposal seems bizarre—but at the time, the company was one of the most powerful economic forces in the state, and the regulated utilities had incentive to grow their demand and grow their sales. But the proposal was bizarre because California's Central Valley is surrounded by mountains that give rise to the worst air quality issues—even to this day in the nation. So, we organized a grassroots campaign under the moniker, “Death in the Delta,” walking door to door in conservative Valley communities. We also unleashed a flood of research-related engagement at the university, like air quality analysis, health analysis, effects on agricultural productivity, etc. And our leaflets ended up on the desk of young Governor Jerry Brown, who repeatedly (we learned) asked his staff about our movement. He was already against the construction of large central-station power plants in California, but he needed a grassroots political movement to enable him to exercise his influence in the regulatory bodies and before the legislature. So, I learned from that experience that one cannot expect the right outcomes from government without support from the affected party. Sympathetic agents in government need to be and want to be supported politically and by research. So, at the time, I threw myself into political activism—but over time, I migrated to environmental economics research, which landed me at Resources for the Future.

Kristin Hayes: Yes, we're very fortunate to have had you for so many years. Good to know about your history in the state of California, too. I know there are lots of reasons why that's a particularly interesting place to work, but obviously you have a personal connection there, too, so that's great.

Let's start with some background on California's cap-and-trade program, just to set the stage for our discussion today. Can you quickly summarize when the program was launched and maybe a little bit about what it covers and what stage it's in now?

Dallas Burtraw: The program was authorized in 2006 by Governor Schwarzenegger, a Republican governor, and it was just one line, if you will, out of a small but famous piece of legislation called AB-32—many people know it by that name. The cap-and-trade program took effect in 2013 and 2014 for electric utilities and industry, and then in 2015, it was expanded to be economy-wide, covering transportation and home-heating fuels, etc.

Kristin Hayes: Gotcha. Okay. And so it's been up and running for eight years.

Dallas Burtraw: Yes.

Kristin Hayes: Yep. Okay. And as you pointed out, too: it is only one piece of California's strategy to reduce greenhouse gas emissions. Is that right?

Dallas Burtraw: Yeah, that's right. And it's really an important point to keep in mind that we, as economists, often think about the cap and trade or something like that (or, equivalently, maybe a carbon tax) as just being a policy instrument that you bring in—a one-and-done sort of thing.

The California cap-and-trade program covers only 75 percent of the greenhouse gas emissions in the state. So, even though we say it's economy-wide, it's covering all fossil fuel combustion. There's still a lot of other sources of greenhouse gas emissions in the state. So, California's emissions reduction goals apply economy-wide, and the trading program constitutes one major portion of the state's overall efforts to achieve that outcome.

Kristin Hayes: Okay. I think that's good to know, because I have a feeling we'll talk later about the intersection of cap and trade with some of the other policies that the state is pursuing to really reduce those emissions, but it's great to have that context. And I know that we're going to talk a fair bit today about the cap-and-trade program’s allowance market, so I wanted to get some baseline information there, too—in particular, about the design of allowance allocation in California. How are those allowances allocated, and what happens to any revenue that's generated by allowance sales, for example?

Dallas Burtraw: Okay, well that is a key piece of the architecture for the cap-and-trade program. You can think that roughly half of the allowances (a little less than half) are given away for free to affected industry on an output basis to provide a production incentive, so that they still haven't recognized an opportunity cost associated with using allowances, because they could, after all, sell them to someone else—but they get the allowances initially for free in order to fight leakage, and because there's no benefit of having jobs and emissions leave the state only to show up somewhere else. And another chunk is given away for free to the investor-owned utilities and to the publicly owned utilities (natural gas and electricity), and they are given for the benefit of ratepayers.

So, for the investor-owned utilities, they must consign their allowances to the auction before those allowances can be used for compliance. And then the revenues are returned to the rate base for the benefit of ratepayers, and the large majority of them are actually periodically given as dividends on ratepayer bills.

The other half of the allowances are auctioned. You roughly think they comprise that portion of emissions that's associated with the transportation sector and some of the other sources, so I refer to those as the state-owned allowances. And the revenues from that auction go to the Greenhouse Gas Reduction Fund, which is intended to fund investments and other good program-related things in the state. What's really important to note about that, then—and it's gotten a lot of attention in other states and even reflected in environmental Justice40 stuff at the federal level—is that an important portion of the allowance value is required to be invested in disadvantaged communities or go to the benefit of disadvantaged communities, and to date, over 50 percent of the value of those allowances has been invested in disadvantaged communities.

Kristin Hayes: Okay, great. And just to get a little bit more specific: What is the current—maybe I should ask what is the historical price range for allowances—but at least, what is the current price range for allowances? And I don't know if you know this offhand, but what's the overall volume of revenue that's been generated across these eight years of a functioning cap-and-trade program?

Dallas Burtraw: That's a good question, and it’s very interesting to me. The price has been hovering just above the price floor in California for several years. So, the price floor most recently, in 2022, is going to be about $19 a ton. But in the last six or eight months, there was a stark increase in prices by two-thirds. So, the prices have reached up to $28 or $29 a ton in California, and this phenomenon mirrors what's gone on in the Regional Greenhouse Gas Initiative in the northeast states, and especially in Europe, where prices have gone from, just three years ago, at 5 or 8 euro per ton, to up to 80 euro per ton today. So, there's some dramatic changes happening in these markets. The value of the allowance market in California—it swings a lot with the price, of course, in this case, but we are talking an annual value of 5 to 10 billion dollars per year.

Kristin Hayes: Okay. And so it sounds like the price has hovered at a pretty low level for some time and is now going up. What has led to that plateau for a while, and what's led to the increase now?

Dallas Burtraw: Well, I'd like to just take a step back and point out one other aspect of the overall program architecture in California. The primary way that emissions reductions have been achieved is through regulations and standards for a way that energy is used in the state. California has a process called the Scoping Plan process. It's a multiagency project, and they develop a blueprint for how the state's going to achieve its climate reduction goals.

The first Scoping Plan identified over 80 percent of the emissions reductions that were needed to be achieved, associated with regulations, and only the remaining 20 percent (approximately) of emissions reductions were associated with the influence of the cap-and-trade program and the price of emissions allowances. The next Scoping Plans increase that share that was associated with the price effect of the cap-and-trade program up to the neighborhood of 40 percent.

So to an economist, this is success, to see an increasing influence of prices because of the efficiency that the approach brings to the problem. So, the existence of these other regulations pushes down the price in the allowance market, because it's the regulations that are making things happen—it's not the price that's really making things happen. And that is viewed by many observers as being a problem in the California market, and then , in these other markets we mentioned a moment ago, now we see the prices rise in the California market. And there could be a number of reasons for that, including the increased stringency over the course of this decade that's expected from both sources covered by the cap-and-trade program and for the state's goals overall.

Also, the expanding markets: Washington State has just in 2021 passed comprehensive climate legislation, including a cap-and-trade program that many observers anticipate or hope will ultimately be linked with the Western Climate Initiative with California and Quebec, which are partners today in the carbon market.

And then the other phenomenon that's very important to watch is the increased involvement of noncompliance entities—that is, investors or other parties that are holding allowances in the markets—and that demand for allowances is driving a price.

But I think probably the most important phenomenon is the anticipated stringency over the course of this decade. California's goal for this decade is to achieve 40 percent below 1990 levels of greenhouse gas emissions, and that corresponds pretty well to 40 percent below 2020 levels—because by 2020, the state had pretty much come back into alignment with 1990 levels of emissions. So, that translates into 4 percent per year, and that's also reflected roughly in the path that's laid out for the cap in the cap-and-trade program. So, that's a pretty ambitious rate of emission reductions.

Kristin Hayes: It certainly is. Well, this is a great lead-in to my next question about allowance banking. So, let's turn to the report itself.

As I noted at the outset, the report comes out from the Independent Emissions Market Advisory Committee (IEMAC), of which you are the chair. Feel free to mention anything you'd like about the mandate of that group, but I also wanted to talk about the substance of your recent report—and in particular, it's organized into a few main sections. I'd love to talk briefly about each of those.

So, let's start with allowance banking. What can you tell us about why the committee looked closely at the magnitude of California's allowance bank? (That is, allowances that remain in circulation but that haven't yet been used for compliance.)

Dallas Burtraw: Right. Well, banking is an important feature of the California program. It brings a lot of cost-effectiveness and reduces cost for compliance entities. But what is noteworthy is that the size of the bank—we can sometimes refer to it as the total number of allowances in circulation—has grown to be very large. And it wasn't until just the beginning of January of this year that we had the final word on what was the size of the bank at the end of the last compliance period (which ended at the end of 2020), because it takes a lot of time for companies to true up, and everything like that, all the accounts to be reconciled.

The committee itself had been developing our own estimates about what was the size of the bank, and then now, those estimates turned out to be pretty much spot on. The somewhat sobering finding is that there's 321 million allowances that reside in private accounts. This is greater than the annual issuance of new allowances and greater than the projected emissions reductions that would be achieved by 2030, under the declining emissions cap at 4 percent per year.

So it looks like, while there are these very ambitious goals, there's also this large bank of allowances that could come back into the market and enable greater emissions. And, further, there's another 274 million allowances in public accounts that would reenter the program if the prices rise to a level that triggers a release of allowances. So, this poses—I don't want to say a dilemma, but a question as to how much the cap-and-trade program is going to be able to contribute to achieving the overall state's legally mandated goals.

And to the extent that the cap-and-trade program does not contribute to emissions reductions at sources that are covered by the program, that’s 75 percent of overall greenhouse gas emissions in the state. That means that more emissions reductions have to occur at the other 25 percent of sources that aren't covered by the cap-and-trade program, and those are things like natural working lands, municipal solid waste, methane associated with natural gas use, and things like that.

Kristin Hayes: So, from a cap and trade novice perspective, it seems somewhat odd that the bank would be of that significant a size given the other metrics that you laid out—but is that really a problem? You mentioned that those allowances might flow back into the market at some point, but how do you think about the challenges posed by a bank of that size? And were there recommendations that you and the committee offered based on your findings?

Dallas Burtraw: Well, I'm glad you asked that question, because one has to be careful with the judgment about the bank. There's no conclusion one can reach based on theory or costs or technology options that can be identified now about what is the optimal size of the bank. It's the result of the decision of private actors, and that's the way the market is intended.

Kristin Hayes: That's how the market works. Yeah.

Dallas Burtraw: Is intended to work—right. But nonetheless, it's really noteworthy that the bank is of this size. The one tangible recommendation that our committee made to the Air Resources Board was to develop metrics about the size of the bank that are visible annually or in real time, so that the market participants and the legislature can better observe the prospects for emissions reductions and what's going on in the market.

But beyond that, the question is: Is there something that we should do about the bank? And that became the second major topic that we took up in the report, which gets at market design and reform. You ready to go there?

Kristin Hayes: Let's go there. That sounds great.

And I just wanted to call out for our audience: I really love how you characterize the steps that you need to take to inform any potential reforms to the market. I just thought this was such a nice summary, and you noted that the first step is to know the size of allowance supply, which is what we were talking about before. How big is the allowance supply? How many are banked? How many are being made available?

And then the second is to know (if in fact those numbers are a problem): Is that supply the right size or not?

And then the third thing to know is what to do if it is a problem.

So, I just thought that was a neat three-step lens. And, based on that three-step lens, tell us a bit about what you recommended on potential market reforms.

Dallas Burtraw: Right. Well, the key thing here is to have some humility and recognize that our committee doesn't write regulations and doesn't make overall decisions. And so, that second step—that is the step that resides with policymakers, with the Air Resources Board, and/or the legislature—to decide if there is a problem. Once we give them the information about the size of the bank, is there a problem?

But the committee can inform the third step: What might you do about it? And so, for two or three years in a row, we have taken some careful thought to questions of what to do if there's a problem and the market needs to be reformed through some adjustment to allowance supply. And we identify, fundamentally, two different approaches. One would directly address the cumulative supply of allowances that are available in the emissions market; for example, just by reducing the number of allowances that enter the auction or something like that.

And this approach has been done before in RGGI—twice, with great effect. And it's in the middle of being implemented in the European Union—something equivalent to the California situation—where, in 2023 if things go as expected, a full year's worth of allowances will essentially not enter the market in order to absorb the existing bank that already exists in the European Union. And that contributes, importantly, to why we've seen the price go up in both RGGI and in the EU context.

So, this is one approach. But the disadvantage of this approach is that it could offer a market surprise. And the problem with a market surprise is the possibility that there could be other surprises that introduce regulatory uncertainty. It could undermine the working of the market overall, and it can appear somewhat arbitrary from an investor's perspective.

So, a second approach would be to address the price of allowances by increasing the price floor—or better, perhaps, to add one or multiple additional price steps. I like to say (and people who are listening to this probably have in their mind) the cap-and-trade program—there's this fixed supply of allowances, and that's what's being bought and sold. But really, we've already moved beyond that model. So you should wipe that model off your—

Kristin Hayes: Your mental map. Yep.

Dallas Burtraw: … your mental map and replace it with something that looks like a staircase. That they are at increased prices—there're increasing number of allowances that come into the market. And that makes the market look and act like every other commodity market, in that, if prices fall, you see fewer oranges coming into the market over time or less natural gas—and then, as prices go up, you see a greater supply.

So it's sort of a hybrid (people say a hybrid) between cap and trade and the tax. But this isn't firmly rooted in a market context. But by adding additional price steps: then, if the price were to come down or as it starts to move, that's a way for the investors to anticipate that supply will automatically contract, and it sort of provides greater governance for the direction of prices going into the future.

Overall—because of the responsiveness of the demand for allowances to the price of allowances—we would expect the value of the market … you asked earlier, and I said something like $5 billion to $10 billion dollars per year, in that neighborhood. But if there was a restricted quantity of allowances in the market, the price would go up, and also the overall market value would go up. The price would rise by more than the quantity that's being constricted.

So, this is potentially an opportunity, because it could mean that there could be more value going to the Greenhouse Gas Reduction Fund, which, in turn, makes more money for investments in climate-related goals—especially funds that are being directed to disadvantaged communities, which has been a major concern to the legislature.

However (and now I know I'm getting pretty in the weeds here), this is a final thing that I would like people to appreciate, because it's probably not anticipated by others: I mentioned that the utilities consign their allowances to the auction. Those allowances get sold before any of the other auction allowances do, so if anything were to happen through a price trigger that contracted the supply of allowances in the market, it's the state-owned allowances that wouldn't get sold—not the utility allowances. And even more so, if you were to continue to give free allocation to industry, and the utility allowances all continue to get sold, and then something is going to adjust supply—then it's only that residual part (which is the state-owned allowances) that are getting buffeted around by changes in the allowance price. It could really cause a lot of political disruption, because these investments are a really important glue for the coalition that's holding together the state program.

So, the committee made a succinct two-part recommendation: One, that all free allowances should be consigned to the auction, and the value of those allowances then go back to the parties that originally received them. That way, everybody should be indifferent to that, because they're getting the same value, but it makes the whole thing more transparent. And then secondly, any adjustments to the supply should be proportionally applied to every source of supply, so that there's not a favoring going to utility customers or to industry, as opposed to the communities that are receiving the benefits of the Greenhouse Gas Reduction Fund.

Kristin Hayes: Okay. A very meaty set of recommendations there. It'll be interesting to see. As you point out, the ultimate decisions are made by the policymakers themselves, but clearly, you've given them a lot to think about, in terms of how they might move forward.

So, there are two other sections in the report. Maybe we can just touch on those briefly, too. The next step is the ever-challenging topic of offsets. My understanding is that the state has several offset protocols, but I believe you mentioned that forests constitute about 80 percent of supply to date.

Dallas Burtraw: Right.

Kristin Hayes: Okay. So, how has the availability of offsets affected California's carbon market to date, and does the committee have any recommendations related to that offset protocol moving forward?

Dallas Burtraw: Well, I can tell by the way you gingerly approached the subject, Kristin, that you appreciate that offsets are a controversial topic.

Most of the science would support the idea that there are, potentially, substantial emissions reduction opportunities in forest and agriculture and outside the sources that are covered by the cap-and-trade program, but the challenge is an economic and institutional one and motivating and validating these reductions, so that they actually occur. So, in the context of our market, offsets exacerbate the supply problem, because they're additional compliance instruments, and they expand the volume. When I talk about the size of the banks, there's then also the possibility of—written in now the design—that there will be additional offsets also available. So, that expands supply. And against all this, there is still a—I don't want to say raging; I like to think it's constructive—but there is a deep conversation continuing to go on about the validity of different types of offsets and whether a ton is a ton, whether—

Kristin Hayes: And for how long. Yeah.

Dallas Burtraw: And for how long—yeah. A lot of that is beyond my expertise, but the committee is knowledgeable about that. So we identify potential reforms here, too.

The reforms that we nominate are that, first of all, there should be a comprehensive ex post assessment of emissions changes associated with offsets, and then adjustment allowance supply could be done in response. If it turns out that these emission reductions associated with forest are not permanent—say, because of the forest fires, for example—then the state could retire additional allowances. A second is to count offsets under the cap—and this is really simple, but really a big change in direction. The offsets are added on top of the cap. So, if you had a cap of 100 tons, then 4 percent of that could be offset. Then really, if you bring offsets in there, it allows the other emissions to still occur. So, the offsets are outside the cap.

But the new program in Washington State is: the legislative language directs regulations to be developed that would have those offsets count underneath the cap. So, if offsets from forests (or whatever) were brought into the market, then that would be a ton-per-ton fewer allowances that would actually be issued.

The approach that I think is best—not politically easy to achieve—is to move all or a portion of the offset funding outside of this engagement of private parties (in terms of buying them as compliance instruments) and fund them directly through the Greenhouse Gas Reduction Fund. That would allow for a fuller accounting of the multi-attribute aspect of offsets: How do they deliver environmental benefits to the state? How are they affecting disadvantaged communities. Things like that.

So, that's what we had to say about offsets, and I'm sure that offsets are going to remain a continuing conversation in California.

Kristin Hayes: Yes—I'm sure they are, as they are pretty much everywhere.

Well, okay. So finally, in the report—the last major section. You and the other committee members spend some time discussing leakage, which I know is a pretty critical consideration in any limited-jurisdiction cap-and-trade program. So is leakage, in fact, a problem? Even with the safeguards that California has put in place within its program, and to the extent that it is a problem, does the committee suggest any reforms?

Dallas Burtraw: That's a great question. And I have to, in part, answer this just from my own personal opinion—not something that was a finding of the committee. My personal opinion is: No, leakage is not a problem in California. But yes, it could be. And it would be if it wasn't for the measures that the state is taking. But really, it's very difficult to assess leakage, especially where a lot of attention has been in the power sector, because power flows in and out of the state, and there's a number of measures I don't want to describe in too much detail, to try to account for that and mitigate that. But the way the state deals with this for the electricity sector is through a border carbon adjustment; that is, that the entities that bring electricity into the state, they have to surrender emissions allowances associated with the emissions intensity of that power.

And more recently, there is the energy imbalance market, which is an emerging day-ahead market that really adds a lot of efficiency to the western power grid, including a more timely use of renewables within the western grid. So, it's really a key element to expanding the role of renewables in electricity, generally. But that kind of market is a pooled market, and you really can't identify contracts that impose an obligation on some party to retire allowances. So, the state has retired millions of allowances after doing modeling ex post to say, “What is the leakage that we estimate that was associated with the emissions imbalance market?” And our recommendation is for the state tp consider expanding that to the day-ahead market, which could well emerge in the next few years and over the large set of western states.

The second part of the leakage question has to do with industry. Where there was output-based allocation for industry that I already mentioned—and the modeling evidence is that if it were not for this output-based allocation, there would be important leakage—to date, I have not seen any evidence that suggests that there is leakage. And in fact, because of this output-based allocation, some elements of industry have actually become fans of the program, because (along with their compliance obligation) there has been direct engagement by state agencies and awards by state agencies to drive innovative investments in dairy and in food processing, etc, which are really important parts of California’s economic landscape. So, in the industry side, it seems to be holding up pretty well.

Kristin Hayes: Okay. So, just to summarize that point, then: It does sound like (again, I recognize that, as you caveated, this is your opinion), your sense is that California has actually done a pretty good job at putting in safeguards and figuring out what data they need to understand the magnitude of the leakage problem, and then taking actions accordingly. So, there may be some reforms, but in general—and of course this is an issue that's important to watch moving forward—this sounds like a relative success story so far. Is that fair?

Dallas Burtraw: That's good. But I have to caveat what I said in one regard: that it is tough to know what the leakage is in the power sector. And I think a lot of observers—just because it seems like what they say is “contract laundering” could occur—and, as economic incentives are, that it will occur. So, it may be difficult to observe, except with simulation modeling, but empirically, it's very difficult to put your finger on.

So yeah, there may be some happening in the power sector, but the reason I don't fret that it's a huge problem is that the transition in the whole western power grid is so dramatic, and in large part influenced by California as the major power buyer in the state. The move away from coal to natural gas (and, increasingly, the move from natural gas into renewables) throughout the western states means that the western grid has become increasingly clean over time. So, while leakage is a concern in the short run—and nobody likes to be not getting the tons reduced that we want to get reduced—the overall trend in the power sector is really encouraging, and that is reinforced by the rules and regulations in the California program.

Kristin Hayes: Great. Okay. Oh, Dallas, I knew this was going to be a really meaty conversation. I'm so glad that our listeners got to really get a sense of the depth of your expertise in this area. So, it's been great, and thanks for talking us through it.

So, I did want to close with our regular feature, Top of the Stack—and I'm actually particularly curious to know what's on the top of your stack, Dallas. Any more good content? It could be a book, an article, something academic, something non-academic, on this topic or not—but, anything you'd want to recommend to our listeners?

Dallas Burtraw: Yeah. I'll tell you, Kristin, I've been poring through a book that came out last year called In The Struggle, by Daniel O'Connell and Scott Peters, about California agriculture. Some people may be familiar with the 1902 Reclamation Act, which provided federal funding for water development in California, with the promise of land for small family farmers. But that promise was never fully realized. It was fought and undermined and finally eviscerated in the 1980s. So, a huge power shift—an economic shift in California. And, as you probably are aware, wave after wave of immigrants from China, Japan, the Philippines, and Mexico, and then Depression-era migrants from Middle America, came into the state and were played off against each other. This book, In The Struggle, is a look at the role of scholarship in critiquing and engaging California industrial agribusiness and the effect of the conglomeration of landholdings on communities and on workers. The book goes in depth on the work of eight scholars. And what's moving to me is that two of those individuals, Isao Fujimoto and Don Villarejo, were the two persons who most influenced me as mentors when I was an undergraduate at UC Davis. So, their work is impeccable, but it's organized as research for action and with the intent of informing people and disadvantaged groups, to enable them to engage in the policy process. It's a great story that illustrates how research can stay engaged with the values that brought us into this field of work in the first place.

Kristin Hayes: Wow—great recommendation. Thanks so much, Dallas. It really has been a pleasure, and I'm sure there will be other opportunities to talk to you in the future, but this was a great one to start with. So, thank you again.

Dallas Burtraw: Thank you, Kristin. It's really a pleasure.

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