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The Department of Water and Power (DWP) San Fernando Valley Generating Station is seen December 11, 2008 in Sun Valley, California. California is making a carbon-credit market that will change the ways utilities generate power, businesses use electricity, and personal transportation.
The auction hammer comes down tomorrow on California’s controversial “cap-and-trade” emissions program. California put itself at the forefront of climate change action in 2006, when legislators approved a far-reaching environmental law designed to drastically reduce greenhouse gases by 2050. A key provision of AB 32 was the “cap-and-trade” system that compels businesses financially to lower their carbon emissions to set levels.
Under cap-and-trade, a limited amount of carbon emission permits will be auctioned off to businesses, such as utility companies, food processors and refineries. Among those in line to buy are Google, Sokol Blosser Winery and UPS. Those companies that succeed in reducing their emissions can then turn around and sell their extra permits to other, more highly polluting businesses. While the bulk of the permits will be free to start with, the cap will gradually decline over the next few years, giving financial incentive to businesses to comply.
A number of California businesses have been vocal in protesting the program, which will cost them collectively a total of $964 million for 2012-2013 allowances. The drastic boost to their bottom line, they say, will stifle growth and result in higher costs to consumers and loss of industries and jobs to other states. But despite their objections, Governor Jerry Brown has refused to postpone the program. When the permits go on sale tomorrow, the prices for each ton of carbon emission will be determined by the auction.
Will we see improved air quality from cap-and-trade? Can businesses reduce their carbon footprint if the price is right? Does California stand to lose out economically by forcing businesses to comply with emissions standards?
Molly Peterson, KPCC environmental reporter
Gino DiCaro, Vice President, Communications, California Manufacturing and Technology Association (CMTA)