FILE - In this Dec. 16, 2010 file photo California Air Resources Board chairwoman Mary Nichols is seen during a CRB hearing in Sacramento, Calif.   (AP
FILE - In this Dec. 16, 2010 file photo California Air Resources Board chairwoman Mary Nichols is seen during a CRB hearing in Sacramento, Calif. (AP Photo/Steve Yeater, file) (Steve Yeater)

SACRAMENTO -- Mary Nichols, chairwoman of the California Air Resources Board, is widely regarded as one of the most knowledgeable and influential clean air and climate regulators in the United States.

In 2006, California adopted AB 32, also known as the Global Warming Solutions Act, which laid the foundation for a cap-and-trade program that sets lower limits on companies' greenhouse gas emissions and allows those who emit less than their cap to sell permits to those who exceed their limits. The first state auction of emissions permits will be held Wednesday.

The Mercury News recently interviewed Nichols in her Sacramento office about that program. Her answers have been edited for length and clarity.

Q: The cap-and-trade program covers 600 facilities in California that are responsible for 85 percent of the state's greenhouse gas emissions. What is the other 15 percent? Is that methane from agriculture?

A: Methane, other high potency greenhouse gases, direct emissions from vehicles. There was never an intent to go beyond CO2, which is relatively easy to assign tons to and account for. There are plenty of other sources of greenhouse gases out there in the world that are not within our inventory, because we don't know how to capture them.

Q: In 2015, fuels and natural gas will also come under the cap. Is the second compliance period more important in some ways than the launch of the auction Nov. 14?

A: It's the other shoe that is going to drop, and there are certainly a lot more tons of carbon associated with it. From the perspective of the market, it will make the market much more interesting to investors.

Q: Are polluters still fighting tooth and nail to delay the auction?

A: A petition was sent to the governor Oct. 12, signed by a major trade association, asking to cancel the auction. So far there has not been a response.

Q: California originally hoped to partner with several other Western states on a regional cap-and-trade program, but one by one the other states pulled away after the 2010 elections. How does it feel to be going it alone? It puts more pressure on California to get this right.

A: California always leads the way. There's nothing new about that. We prefer to have partners, but in some ways the fact that we're not designing a program with other states means that it has been easier to design a program that works. We are the biggest emitter of greenhouse gases in the West, and the biggest dog in the WCI, or the Western Climate Initiative. (WCI is a collaboration of independent jurisdictions, including California and Canadian provinces, working together to implement emissions trading policies to tackle climate change at a regional level).

Q: Some critics on the left argue that the trading system can be gamed by big banks, and some would prefer a carbon tax. What do you say to those critics?

A: The reason to have a cap-and-trade program versus a tax is the cap. A tax does generate revenue, and it can encourage people to use less of whatever it is that you are taxing, but you have no way of knowing whether you set the level at the right amount. A carbon tax doesn't guarantee that you get greenhouse gas reductions. We have designed the system in various ways to prevent the kind of gaming in the market that occurred during the energy crisis in California. There will be auditing of the whole system. It's filled with checks and balances. We've erred on the side of making this program transparent and enforceable.

Q: There's a lot of discussion about how the revenue from the cap-and-trade program, which has been pegged at $2 billion to $14 billion a year, will be spent. If you had your druthers, how would you spend the money?

A: We have not predicted anything like those numbers for the start of the program. The revenue will not be that high in the beginning. We're expecting revenue of $500 million to $1 billion in the first year. We have to come up with a spending plan, and we're working with the governor's budget process and office, and the Department of Finance. There's also legislation that dictates that 25 percent of the revenue has to benefit disadvantaged communities, and 10 percent has to be spent in those communities. The priority ought to be on making investments in programs that will help California in the long term use less energy per unit of economic output, and make our state more climate resilient.

Q: Is this your last job? Do you ever think of retiring?

A: I am committed to completing the work I am doing here, whenever that is. I've never had any desire to think of myself as a retired person. I will always be working; it is just a question of where. Whatever the job description is, I can't imagine not continuing to work on the issues and for the causes that I've cared about all of these years. The best part about getting older is that you get to mentor younger people coming along in the field. I have a network of people whose lives and careers I meddle with from time to time.

Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.

Mary Nichols

Position: Chairwoman of the California Air Resources Board since 2007
Age: 67
Birthplace: Minneapolis; grew up in Ithaca, N.Y.
Residence: Los Angeles and Sacramento
Education: Cornell University and Yale Law School
Previous jobs: Opened the Los Angeles office of the Natural Resources Defense Council; assistant administrator for the EPA's air and radiation program under President Bill Clinton; California secretary for resources 1999-2003; director of the UCLA Institute of the Environment
Family: Married; two grown children and a 5-year-old granddaughter

Five things about Mary Nichols

1. She was active in the Civil Rights movement and attended the 1963 March on Washington, where the Rev. Martin Luther King gave his famous "I Have a Dream" speech.
2. She says the best thing about getting older is mentoring young people entering the field.
3. She faithfully attends the New Orleans Jazz & Heritage Festival every year.
4. She has visited each of California's 58 counties, many of them when she was the state's resources secretary.
5. Friends and colleagues know of her fondness for the aesthetics of the American Southwest, including turquoise jewelry. In her Sacramento office, she keeps sage by her computer.