Critics doubt cap-and-trade will be as sweet as ice cream
Federal Cap and Trade legislation may, according to Senate majority leader Harry Reid (D-Nev.), be dead on the Hill, but even in advance of the Nov. 2 general election, the previous day the state California Air Resources Board (CARB) had released its proposed greenhouse gas (GHG) cap-and-trade regulation.
Proposition 23 would have put AB 32, the state’s greenhouse gas law, on hold until the unemployment rate held at 5.5% or lower for at least a year. That, state officials acknowledged, has happened only three times in the past 40 years, having the practical effect of killing the law.
No matter, Prop 23 was defeated, clearing the way for cap and trade to take effect in California in 2012.
The cap-and-trade program will apply to about 85 percent of GHG emissions in the state from 360 businesses, reports Bay Citizen. Those industries impacted include large industrial emitters, the electricity sector and fuel distributors.
The cap-and-trade rules would place a limit, or cap, on GHG emissions for the state that would decline over time, reports The Wall Street Journal.
Aimed at helping the state meet its target goal of reducing GHG emissions to 1990 levels by 2020, the?emissions cap will decline approximately 2 percent a year from 2012 to 2014 and about 3 percent a year after 2015, reports Bay Citizen.
Companies could also purchase carbon credits, or offsets, and use those offsets to meet up to 8 percent of their “compliance obligation,” which is up from the 4 percent proposed by CARB earlier this year, according to the Wall Street Journal.
Between 2012, the first year of the proposed cap-and-trade program, and 2020, “a maximum of 232 million offset credits may be used,” with each offset credit representing one metric ton of carbon dioxide, reports the Bloomberg news service.
The offsets will be approved by the Los Angeles-based Climate Action Reserve, and the accounting system is said to meet both local industry?and U.S. Environmental Protection Agency GHG accounting requirements, according to a report in The New York Times.
California is also working with six other western states and four Canadian provinces through the Western Climate Initiative (WCI) to design a regional cap-and-trade program.
Cap-And-Trade critics say the free market is the best way to achieve the reductions in GHG emissions that society wants. There is also considerable push-back mounting to putting CARB in charge of the regulation. Opponents have called CARB an “objective-oriented … activist agency that plays fast and loose with science,” a charge borne out by recent revelations that CARB ignored seriously flawed data in key emissions analyses in the state’s off-road diesel vehicle regulations.
“I believe the battle over cap and trade in America is taking place in California,” Republican Assemblyman Dan Logue told the New York Times. Logue, who represents districts in northern California, authored the ill-fated Prop 23 ballot initiative. “What we’re saying is, this is not the time for political correctness. This is a time for putting America back to work; let the experiments happen later.”
Proposition 23 was largely funded by petroleum interests, including Texas oil giants Valero and Tesoro, who said AB 32 will end up forcing them to invest millions of dollars to comply, and asserted that it would force companies to cut jobs and raise the price of gas at the pumps.
Big oil, however, was clearly not united in its opposition: some major California oil refineries, including Chevron, stayed out of the battle.
“Implementing AB 32 will cause significant job losses and higher energy costs in California,” said Katie Stavinoha, a spokesman for Flint Hills Resources, a Kansas-based petroleum company owned by the Koch brothers. “The company also thinks it sets a bad precedent for other state governments to do the same thing.”
Curiously, the issue hardly breaks cleanly along business lines. Some business analysts think it could be a reflection of California’s diverse business environment, which has always had a strong research and development sector, powered by venture capitalists ready to finance cutting-edge technology.
Numerous business groups opposed the drive to suspend the greenhouse law. And the list of contributors backing Prop 23 was noteable for the absence of many of those same venture capitalists.
CARB will hold its final vote of the cap-and-trade program on Dec. 16.