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The Debut of California's Cap-and-Trade Program
California initiated its new, landmark cap-and-trade program on Wednesday, November 14, with its auction of greenhouse gas pollution permits. The following is an excerpt of an Associate Press report that appeared in Contra Costa Times newspapers.
"The cap-and-trade plan is a central piece of the state's 2006 global warming law, AB32, a suite of regulations meant to reduce dramatically the state's emissions of heat-trapping gases.
"The program places a limit, or cap, on emissions from individual polluters. Businesses are required to cut emissions to cap levels or buy allowances from other companies for each ton over the cap that is discharged annually. If a business were to cut emissions below the cap, it could profit by selling its extra allowances.
"The program's first auction on Wednesday is being closely watched, as it will essentially put a price on carbon emissions for the first time in state history. Only the European Union has implemented a similar plan in terms of scope.
"But the California Chamber of Commerce has sued, challenging the validity of the state's cap-and-trade program. The lawsuit filed Tuesday in Sacramento Superior Court was not expected to stop the auction. The group was not seeking an injunction to halt the program immediately, said Denise Davis, a chamber spokeswoman.
"The suit challenges the California Air Resources Board's authority as stated under the state's 2006 climate-change law, AB32, to sell the permits, called "allowances," for the purpose of generating revenue for the state. It is also challenging the sale of allowances as an illegal tax, arguing that taxes need a two-thirds vote by the Legislature.
"This action by an unelected state board to use regulatory statutes to raise tens of billions of dollars from taxpayers is unprecedented in our state's history," the chamber's complaint said.
"For the first two years of the program, large industrial emitters will receive 90 percent of their allowances for free in a soft start meant to give companies time to reduce emissions through new technologies or other means. The cap, or number of allowances, will decline over time in an effort to drastically reduce greenhouse gas emissions by 2050.
"The chamber's challenge is the latest lawsuit filed over the state's landmark global warming law, which so far has survived myriad legal challenges."
California officials called the carbon auction a success
On November 19 Contra Costa Times newspapers published the following:
"State regulators say California's first auction of greenhouse gas emissions permits went smoothly, and that all of the pollution permits available for 2013 were sold.
"The California Air Resources Board said 23.1 million permits-which allow for one ton carbon-sold for $10.09 each at last week's auction.
"The permits are part of California's so-called "cap-and-trade" program-a central piece of the state's 2006 global warming regulations seeking to dramatically reduce emissions of heat-trapping gases.
"Businesses are required to either cut emissions to cap levels or buy pollution permits called "allowances" from other companies for each extra ton of emissions discharged annually.
"Petroleum refiners, manufacturing companies and other industries have been outspoken opponents of the program, calling it an illegal tax that will hurt California's economic recovery."
Auction Information from California's Air Resources Board (ARB), Click here
ARB Summary Auction 1 Summary Results Report, Click here
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