CARBON TRADING CRITICS WRONG: STATE FAR FROM ALONE

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, MARCH 4, 2011, OR THEREAFTER

BY THOMAS D. ELIAS
“CARBON TRADING CRITICS WRONG: STATE FAR FROM ALONE”

Because Republicans in Congress have steadfastly stymied attempts to get the federal government to act against global warming and climate change, critics of California’s new carbon trading rules usually get little contradiction when they insist those regulations will see this state going it alone and putting itself at an economic disadvantage.

But they’re wrong, at least in large part.

For California isn’t going it alone at all. Long before this state's Air Resources Board voted 9-1 to start a system of trading in pollution allowances next year, a Regional Greenhouse Gas Initiative set up a similar system in 10 northeastern and mid-Atlantic states. There was also the Western Climate Initiative covering seven western states and four Canadian provinces, setting a regional target of reducing heat-trapping emissions (mostly carbon-related) 15 percent below 2005 levels.

And there was the similar Midwestern Greenhouse Gas Reduction Accord covering seven states and two more Canadian provinces. There’s also New Mexico, going it alone with rules as tough as California’s, which may or may not be attacked by that state’s new Republican governor.

Altogether, this means California is among at least 24 (maybe 25) states and six provinces taking similar but not identical actions against climate change because the federal government will not.

They join the European Union, whose own carbon trading system is about to enter its second four-year phase.

Altogether, the American states involved account for well over half the nation’s populace, most of its industrial production and just under half its geographic territory.

Yes, this may make a few companies locate new factories in other states, mostly those in the Republican-dominated Southeast, but those who want to locate near their largest markets will have to contend with the new regulations, whether in California or the other states involved. Which means that if California has placed itself at a competitive disadvantage, it’s not a great one.

And figures like Gov. Brown and ARB chairwoman Mary Nichols may be correct when they say the new rules here and elsewhere will give the state a big advantage as new technologies are developed to reduce pollution and make the companies that do it more profitable because they can then sell off any rights they have to produce their former levels of emissions.

All this has plenty of complications, and California’s rules may be more complex than those elsewhere.

One example is Massachusetts, a member of the Northeast group, whose rules call for heat-trapping gas emissions to be cut 25 percent below 1990 levels by the end of this decade. That’s an even tougher standard than California’s goal of simply getting back down to 1990 levels by 2020.

Like California officials, the Massachusetts energy and environment secretary insists his state’s new rules will produce net gains in jobs and “put the lie to the Chicken Little-oriented debate that equates reducing emissions with economic disruption.”

The Massachusetts tactics include incentives like “pay as you drive” insurance rates that price coverage according to how far people drive, a system that is in its infancy in California, with only two insurance companies so far set to try it. There is also a cap-and-trade system for electric utilities and there are major incentives for power companies to switch from fuels like oil, coal and natural gas to renewable sources like wind and solar.

These moves in large part are imitations of California’s cap-and-trade plan, which sets specific goals for various industries, from transportation to power generation to construction.

Under the rules adopted here, companies that produce less gases than their quotas (the cap) will be able to sell the difference to others that can’t or won’t get down to their required levels (the trade). The prices of such pollution credits have yet to be determined, along with what the state will charge for emission credits it will grant. Companies will also be allowed to sell carbon-sequestration credits if their assets (including forests) absorb more carbon gases from the air than the company produces.

The idea is to set up incentives for companies to clean up their operations: the cleaner a company gets, the more money it can make by selling pollution credits. The caps, though, will get lower each year the system exists. Eventually, California’s plan may link to those of other states and Canadian provinces with similar cap and trade systems, with prices set on an international exchange operating much like the stock market.

The bottom line: California’s rules may be tough, but there are tougher ones in some other states. Which means the state should not succumb to the whining of industries that simply don’t want to clean up their acts.

-30-
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net