California Adopts Nation’s Most Sweeping Cap & Trade Plan

A license plate captured in Sacramento bears the legislative shorthand for California's climate policy.

But it’s just another milestone in a long journey that’s far from finished

It’s official (no, really, this time). California has cap & trade — or will once the program starts ramping up next year. Today’s approval by the state’s Air Resources Board was described by chair Mary Nichols as like “moving a large army a few feet in one direction.”

Ready to roll: A license plate in Sacramento bears the legislative shorthand for California's landmark climate policy.

The objective that “army” is marching — or shuffling — toward is, of course, the fulfillment of California’s goal to roll back greenhouse gas emissions to 1990 levels by the end of this decade. With at least a semi-intentional pun, Nichols calls cap & trade the “capstone” of that effort, although the program is expected to produce at most, 20% of the hoped-for reductions in carbon emissions. The rest will come from other measures either lumped under or related to the state’s Global Warming Solutions Act, more widely known as AB 32.

Those other measures include stricter standards for tailpipe emissions, a “low-carbon fuels standard” (still being worked on), and the ambitious-but-attainable goal to get a third of the state’s electricity from renewable energy sources, also by 2020.

The next major milestone will come late next year, when the state begins meting out permits or “allowances” to release carbon dioxide into the air. At first, 90% of those permits will be given away but analysts have estimated that within a few years, at least half will be auctioned off at a price estimated by Thomson Reuters Point Carbon analytical service to be about $36 a ton.

To most of us, that doesn’t mean much by itself, but for a refinery pumping out a few million tons a year (link to map), that adds up to some serious revenue for the state. How those “carbon dollars” will be spent is one aspect of the program that has yet to be worked out.

Speakers representing business and other interests, including a large contingent from ConocoPhillips, which has four refineries in California, mounted an eleventh-hour appeal to the Board, to stretch out the compliance schedule. Lisa Bowman, who works in safety compliance at the company’s Carson and Wilmington refineries, told me she regards the state emissions fees that will be required as the biggest threat to her job in 22 years.

“We want clean air, there’s no doubt,” Bowman told me after her testimony. “But at the same time the restrictions that this bill is putting on us could run our employer out of business, which puts thousands of people out of work.”

After a lawsuit by environmental justice groups delayed implementation of the cap & trade plan, the Air Board pushed back actual compliance with the regulation to 2013.

Here are some program highlights, taken from a breakdown provided by the Air Board:

·         Program covers about 350 businesses, representing 600 facilities
·         Starts in 2013 for electric utilities and large industrial facilities
·         Starts in 2015 for distributors of transportation, natural gas and other fuels
·         Designed to link with similar trading programs in other states and regions

The Cap

·         Set in 2013 at about 2% below the missions level forecast for 2012
·         Declines about 2% in 2014
·         Declines about 3% annually from 2015 to 2020

Allowances (Permits to Emit CO2)

·         Large industrial facilities
– Start with free allocation but must buy auctioned allowances later
·         Electric utilities
– Free distribution, with value of allowances to benefit ratepayers
– Allowances to be set at about 90% of average recent emissions

Next Steps:

·         January 1, 2012: Cap-and-trade regulation becomes effective
·         August and November, 2012: first auctions planned
·         January 1, 2013: Compliance obligation for emissions begins

California Adopts Nation’s Most Sweeping Cap & Trade Plan 20 October,2011Craig Miller

6 thoughts on “California Adopts Nation’s Most Sweeping Cap & Trade Plan”

  1. Now we can give Nevada a serious challenge to become the state with the highest unemployment rate. Watch out Nevada, California is about to take the dubious honor of having the highest unemployment rate. Oh, yes Nevada get ready for more of our businesses moving your direction.

  2. Largest corporate welfare game ever?

    Carbon credits to sell are no charge for Big oil.

    We pay and Big banks win more.

    Audit the fed, support HR 459 Paul.

  3. From: Nichols, Mary D. @ARB

    Subject: RE: Cheney could be Condit witness
    Date: February 15, 2011 9:54:39 AM PST
    To: Clean Air Performance Professionals

    “This stuff is now a decade old. Normally I wouldn’t bother to respond, but there is enough dirt in the ethanol lobby that you really don’t need to drag in Chandra Levy. Alex Farrell is dead. Gary Condit and Dick Cheney are both alive, but not very relevant. Gray Davis is or was working for ADM to advance the cause of Midwest corn ethanol in California. No big surprises there.”

  4. Alex Ferrell, Grey Davis & Gary Condit interest in fuel oxygenates seemed interesting

* * California CalEPA Secretary Linda Adams, signed a MOU with the UN in China on earth day. China gets about 50% of the world carbon tax and ethanol welfare, the China government gets a 50% tax of the credits.

    ** China goods and services may increase

    ** We pay the, ethanol welfare, carbon tax and Pew Business Environmental Leadership Council (BELC) Member Companies: ABB, Air Products, Alcoa Inc., American Electric Power, Bank of America, BASF, Baxter International Inc., The Boeing Company, BP, California Portland Cement, CH2M HILL, Citi, Cummins Inc., Deere & Company, Deutsche Telekom, The Dow Chemical Company, DTE Energy, Duke Energy, DuPont, Entergy, Exelon, GE, Hewlett-Packard Company, Holcim (US) Inc., IBM, Intel, Interface Inc., Johnson Controls, Inc., Lockheed Martin, Marsh, Inc., Novartis, Ontario Power Generation, PG&E Corporation, PNM Resources, Rio Tinto, Rohm and Haas, Royal Dutch/Shell, SC Johnson, Toyota, TransAlta, United Technologies, Weyerhaeuser, Whirlpool Corporation, Wisconsin Energy Corporation and friends may all share in the public/private partnership of corporate and NGO welfare.

  5. Are all ethanol sales taxed the same? 

    Will BP – DuPont bio – butanol welfare lower the gas price?

GMO corn fuel ethanol gets $6billion per year in welfare for Big oil refiners and Government motors. 

Ethanol for 100 proof sales is taxed $17.00 per gal. 

So what is the tax rate for single serve per gal of ethanol? 

Could a standard tax rate help the California budget issues?

  6. when will we get off the crazy train of the leff over hippies and start worrying about the general welfare of the people of california? thank you fo all the double standard crazy liberals for once again increasing the costs of everything in this nanny state.

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Craig Miller

Craig is a former KQED Science editor, specializing in weather, climate, water & energy issues, with a little seismology thrown in just to shake things up. Prior to that, he launched and led the station's award-winning multimedia project, Climate Watch. Craig is also an accomplished writer/producer of television documentaries, with a focus on natural resource issues.

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