In 2006, the California legislature charged the state with the Herculean task of reducing greenhouse gas emissions to 1990 levels by 2020 to better the state’s air quality while becoming a global leader in the fight against climate change.

That legislation touched almost every industry in California, a state so large it would be the world’s eighth largest economy if it were an independent nation. Its implementation fell to California Air Resources Board Chairwoman Mary D. Nichols, whose regulations to carry out the law have influenced national greenhouse gas emission policies.

“She is the right person, at the right time, in the right place,” said Democratic California state Sen. Fran Pavley, who heads a committee overseeing implementation of the carbon reduction mandate.
Nichols’ expertise and comfort in dealing with both sides of an issue have earned her a reputation as a fair and forceful implementer who can explain the complexities of the regulations her agency is implementing, Pavley said.

Even her toughest industry opponents, who challenged the regulations in court, offered respect for her knowledge base. “She doesn’t always agree with the same solutions we might have in mind. But it’s always good to have disagreements with someone you can respect,” said Allan Zaremberg, president of California’s Chamber of Commerce, in a 2014 Los Angeles Times profile.

Nichols, a Democrat who served as an assistant administrator for the U.S. Environmental Protection Agency’s Air and Radiation program under the Clinton administration, joined the Air Resources Board in 2007 after then-Republican Gov. Arnold Schwarzenegger appointed her to lead the state’s implementation efforts. Current Democratic Gov. Edmund G. Brown Jr. asked her to stay on as the agency’s head.

During her tenure, the Air Resources Board has implemented the world’s second largest cap-and-trade program, affecting industries including electric utilities and transportation fuel distributors. The program trails only the European Union’s emission trading system measured by population and gross regional product affected.

Also following a legislative mandate, the board put in place sweeping regulations for automobile emissions and fuel efficiency that became the model for national standards announced by the Obama administration in 2009.

“We were responding to a mandate for California to take a strong leadership position on climate change that built on the work we have been doing for several decades now to achieve stringent health standards for air pollution,” she said.

“It’s a really positive story we have to tell,” she said about worries that the regulations would lead to changes that consumers wouldn’t like. “I don’t think you can sell something to people that they don’t want to buy.”

California’s cap-and-trade program has become the standard for placing a price on carbon, a notion that environmental economists have pegged as the only real solution for the world to meet the ambitious carbon reduction targets set in the global agreements reached at the 2015 Paris climate conference.

Under the program, sources that emit at least 25,000 metric tons of carbon dioxide equivalents per year must buy carbon credits through a state-sponsored auction.

Affected industries pushed back against the regulations, arguing that increased electric prices would be passed on to customers.

“The great fear that is always promoted by opponents is that energy prices are going to go up, and it’s going to be bad for businesses and consumers,” Nichols said. “Well, in California, we have designed a cap-and-trade program which has not caused energy prices to go up for energy consumers.”

Under the program, households and small business get rebates shown on their bill twice a year from the electric utility, Nichols said. Those rebates stem from revenue generated from the auctions so that it offsets any price increases resulting from the program.

In addition to the rebates, the carbon sales have so far raised almost $1.6 billion in revenue, 60 percent of which the state plans to put toward clean energy infrastructure projects such as a high-speed rail and other transportation programs.

Punitive damages would have been foolish and unnecessary, she said. “We targeted it in that way, so it seems like they are punishing the consumers” by using more greenhouse gas emitting energy sources, Nichols said.

“In the climate work, I generally believe that it is a program that is advantageous to the state’s economy overall on a macroeconomic level and on a more targeted level,” Nichols said.

Nichols’ ability to enact regulations while building broad support for the programs has earned her the praise of leading California lawmakers.

“Mary’s total dedication to a clean and healthy environment has been an inspiration to me ever since I met her,” said Sen. Barbara Boxer, D-Calif. “I learned from her that of course we need to compromise when it comes to legislation if we have to, but never, ever do we compromise the health of the people we are sworn to protect.”

Jeremy Dillon covers energy and environmental policy for CQ. Contact him at JeremyDillon@cqrollcall.com and follow him on Twitter at @jeremydilloncq.

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