The California Air Resources Board is likely to incorporate a carbon trust fund into its master plan for carrying out the state\u2019s global warming law, AB 32, the board\u2019s chair said February 11. The trust would be funded initially by auctioning greenhouse gas emission rights under a carbon cap-and-trade program. \u201cWe\u2019re very excited about it,\u201d said Mary Nichols, Air Board chair. She made her remarks at the final meeting of the Air Board\u2019s Economic and Technology Advancement Advisory Committee meeting. Outlining its recommendations in a final report, the committee recommends that the state adopt a 33 percent renewable portfolio standard by 2020 for the power industry. It also calls for stepped up energy efficiency\u2014including deployment of light emitting diodes for lighting\u2014and development of a smart grid that could use plug-in hybrid vehicles as a storage medium for renewable energy. The Air Board chief told the panel that its recommendations concerning a green fund, green jobs, renewable energy, and green technology were particularly appealing as were its recommendations for curbing carbon dioxide emissions from the forestry industry. Both re-forestation in rural areas, as well as urban forestation, can help serve as carbon sinks that will remove CO2 emissions from the air, the report notes. The committee was established under the law to advise the Air Board on economic issues related to reducing greenhouse gas emissions and fostering new low carbon technologies. The advisory panel, which is slated to formally present a 307-page report to the full Air Board on February 28, proposes creating a \u201cCalifornia Carbon Trust.\u201d Initially it would be specifically funded by auctioning emissions allowances to major industries, like power generators, under a cap-and-trade system. \u201cInvesting revenues from any allowance auctions in low carbon technology development and deployment will greatly increase the benefit of putting a price on carbon,\u201d the advisory panel\u2019s report concluded. To that end, the panel would use the money from auctioning emissions allowances to fund research and development of a wide variety of green technologies that hold the promise of cutting greenhouse gas emissions and creating new green jobs in California. The report, for instance, envisions using the money to spur investment in factories to produce fuel cells and solar panels. That is expected to create both manufacturing and installation jobs in California. \u201cIf auction revenues from a carbon cap-and-trade system are large enough, they can also be used to reduce the negative impacts of some of the more distortionary [sic] elements of California\u2019s current taxation system,\u201d the report further recommends. The new revenue, for instance, could allow the state to reduce vehicle registration and other fees and taxes on low-emitting cars, fuels, and consumer goods as an incentive to purchase them instead of higher emitting products. It further suggests that some of the money be reserved for funding projects that cut greenhouse gas emissions. Under cap-and-trade, emissions levels are placed under a limit that declines each year until the reduction goal of the law is met. Companies that stay under their limit can sell their excess emission rights to those that go over their limit. However, companies that exceed their limit must purchase enough credits to cover excess emissions or be found in violation of the law. This helps assure that total emissions stay under the cap each year. Nichols said the Air Board simply would plug the recommendations right into its overall plan for carrying out the law, which it aims to release for public comment this summer. Under the law, the Air Board must adopt the plan before the year is out.