Cap and trade revenues should mostly go to public, committee says

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A group of academics, business representatives and officials recommends that most economic benefits from the state's carbon trading scheme should go to consumers in the future. KPCC's Molly Peterson has the story.

Under a 4-year-old law, California's supposed to create a market in which businesses will trade emissions of greenhouse gases. Over time, the idea is to shrink the market and the state's contribution to global warming.

A 16-person committee has the job of suggesting the best way to run such a market. Stanford economics professor Larry Goulder says an auction should divide the emissions credits because that approach is easy for everyone to understand.

The group also recommends that an estimated $5 to $50 billion in annual revenue the market will yield should go to the state's budget. Its purpose, Goulder says: to hedge against fluctuations in tax revenues.

"By taking the revenue from an auction and returning it to the general fund to avoid future tax increases it can lower substantially and I emphasize substantially the cost of cap and trade to Californians," he says.

The state's cap and trade plans arrive as a movement to delay global warming legislation is on the rise among businesses and voters concerned with economic impacts. These recommendations and others from the group will go before the state air resources board later this year.