California Businesses Protest Forthcoming Cap-and-Trade Program

Many California officials were initially anticipating that the state’s carbon trading scheme would catch on and trickle to other Western states; however, not a single other state has agreed to institute any form of a cap-and-trade system. To California businesses, this is a severe impediment, as industries operating in other states won’t be slapped with the carbon limits, leaving Golden State firms at a harsh competitive disadvantage.

Countering heated opposition from industry groups on Thursday, California’s top air regulator posed an unwavering defense of the state’s pending cap-and-trade system, which intends to limit greenhouse gas emissions through a carbon trading system. During the hearing, which took place in Sacramento, manufacturers and other groups proposed a number of amendments to the law, including one that would give oil refineries and manufacturers one hundred percent of the emission permits they’ll need to yield to the state in 2014.

The current provision provides businesses with 90 percent of the allowances needed to insure their emissions at the outset of the cap-and-trade program. Mary Nichols, who chairs the California Air Resources Board, swiftly shot down her opponents’ request, arguing that it would grant certain companies undeserved “windfall profits” while signaling unreliability to other business that have already invested in new low-pollutant technologies.

“Easing the transition is one thing; leaving the entire industrial sector outside the arena where every other member of society, from forestry to municipal sewage treatment plants is taking aggressive measures to reduce their emissions is just plain unacceptable,” Ms. Nichols countered.

The soon-to-be-launched program will force emitters to purchase allowances under a yearly emissions cap that will gradually deflate over time. The stringent requirements will order many businesses to buy extra credits from other businesses that hold a surplus of allowances — hence the name, “cap-and-trade.”


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