California’s emissions law to ‘test’ its ailing economy in the new year

posted at 2:05 pm on December 25, 2012 by Mary Katharine Ham

Following boldly in the footsteps of the European Union, California is set to implement a cap-and-trade system in 2013—the fruition of AB 32, the Global Warming Solutions Act of 2006. The bill was passed with gusto in sunnier economic times before we knew California had endured a net outmigration over the past 10 years. This ought to help. The New York Times reports on Morning Star, a tomato producer figuring out how to withstand the financial blow of the new system. Morning Star, it notes, has to stay in California, for proximity to tomato farms, but it may now struggle to compete with foreign producers. Other companies don’t have to stick around:

Companies are trying to figure out how this will affect their bottom lines and have lobbied state regulators to minimize the costs. In the meantime they are weighing their options. Should they stay and adapt or move operations elsewhere? Should they retrofit and innovate to reduce emissions? Should they swallow the regulatory costs or pass them on to customers?…

About 600 facilities with hefty emissions are covered by the Global Warming Solutions Act of 2006. Oil refiners, electric utilities and cement makers, whose greenhouse-gas output totals in the millions of metric tons annually, are the biggest. But over all, dozens of industries are affected.

In recent months, as the start date of the new cap-and-trade program neared, California regulators have fine-tuned the rules, industry by industry, to avoid imposing severe economic hardship while trying to keep the rules stringent. It is a delicate balance. Regulators do not want California companies to lose their competitive edge, because that could make other state governments reluctant to adopt this approach.

The Times notes, the decision to simply move, pay to emit, or pay for emissions-reducing technology may be do-or-die for some companies:

The state’s Air Resources Board is using an array of policies to reach its intended goal of reducing emissions to 1990 levels by 2020. It has tried to structure the cap-and-trade program to encourage industry investment in energy efficiency that could cut costs as well as lower emissions. Investing in energy efficiency may make sense for companies under California’s rules, Dr. Fowlie said, “but if they are making them before their competitors, that could be fatal.”

Companies like Morning Star will be given free credits to cover most of their emissions in the first year of the program in the effort to smooth the transition, but their costs will gradually go up over the years.

The California Air Resources Board— CARB, get it?—held its first auction for credits in November despite a legal challenge from the Chamber of Commerce.

The state government sold $233 million in permits to pollute at that auction, which Cal Watchdog noted at the time, means the state is touting its “success” by crowing over the 23 million tons of pollution it’s not preventing:

CARB apparently considers it a success when industries, instead of reducing pollution, pay off government. But the definition of success should be when industries have to buy a minimum number of permits because they already have reduced their emissions. CARB seems to meet the classic definition of a bureaucracy where the manifest function — in this case, to reduce pollution — has been surpassed by its latent function — to tax industries and public utilities.

CARB reported that the money taken from businesses will be re-circulated back to electricity ratepayers in the form of a rebate called a “climate dividend.” But why have an auction in the first place if CARB is just rebating the monies? This is why the state Legislative Analyst’s Office believes a pollution permit auction is not needed to accomplish pollution-reduction goals. Why doesn’t CARB instead use its conventional regulatory powers to enforce excess air pollution?

Hey, how’s the carbon market doing elsewhere?

The World Bank cites a host of reasons for the decline in interest and activity.

Cap-and-trade legislation failed not only in the United States, they point out, but also in Japan and Australia as political interest in legally mandated carbon markets was hit badly. Weak commitment to carbon trading was also evident in South Korea, where, despite the passage of a cap-and-trade system in its legislature, lawmakers later decided to postpone the launch of an emissions trading scheme to 2015.

The year also saw the carbon market’s reputation take a beating. A rash of fraudulent activity and outright theft of emissions allowances from various national registries disrupted spot trading activity for an extended period and shook confidence in cap and trade as a solution to the climate change problem.

But mainly the carbon markets are becoming a victim of waning government and public interest in cap and trade, coupled with the failure of governments to agree on a replacement to the Kyoto Protocol, which will effectively come to an end in December 2012 if nations don’t sign onto another commitment period.

As a result, the European Union remains the only significant host to carbon trading. Estimates suggest that the Emissions Trading System, which E.U. governments set up to comply with the Kyoto pact, accounts for almost 97 percent of the global carbon market.

Meanwhile, carbon emissions in the U.S. are at a 20-year low without major government interference and before the California law is imposed on 350 employers. But as with the decades-low violent crime and gun crime rates, achieving their purported goal won’t keep our statist friends bent on confiscation.

I’m telling you, it would have been more efficient to elect this guy governor.

Luthor

Exit question (Allahpundit™): Guess who Morning Star says is going to be paying the extra costs in ketchup and tomatoes?


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Forward! (Eastward on the I-10 to be precise.)

ConservativeLA on December 25, 2012 at 2:10 PM

Exit question (Allahpundit™): Guess who Morning Star says is going to be paying the extra costs in ketchup and tomatoes?

China?

Rode Werk on December 25, 2012 at 2:12 PM

Junk Science will produce a junk economy.

pat on December 25, 2012 at 2:13 PM

Companies like Morning Star will be given free credits to cover most of their emissions in the first year of the program in the effort to smooth the transition, but their costs will gradually go up over the years.

MKH

.
Yeah, that’ll work . . . . .

( S i g h )

What is there left to be said about California, that hasn’t already been said?
.
Mary Christ-Mass, Merry.

listens2glenn on December 25, 2012 at 2:19 PM

Let it burn.

vityas on December 25, 2012 at 2:25 PM

pat on December 25, 2012 at 2:13 PM

.
Deliberate sabotage being allowed by a low-information citizenry, will work every time.

listens2glenn on December 25, 2012 at 2:26 PM

…i d i o t s…!!!

KOOLAID2 on December 25, 2012 at 2:39 PM

The all knowing media photographs the condensation clouds coming from the stacks and cooling towers as an emission of toxic flue gases. The same scientific principal as seeing your breath on a cold day. Many take those clouds of moisture for smoke.

mixplix on December 25, 2012 at 2:43 PM

Anti-Death Penalty Professor Proposes Death Penalty For Global Warning Deniers
http://mypetjawa.mu.nu/archives/214636.php

So let me get this straight - this professor opposes the death penalty for criminals such as mass murderers, child molesters, and rapists, but he wants people who disagree with him to be killed? By default, does that mean he agrees with what mass murderers, child molesters, and rapists did?

GW is different. With high probability it will cause hundreds of millions of deaths. For this reason I propose that the death penalty is appropriate for influential GW deniers.

This professor is proposing the death penalty for people who simply deny global warming. Because their beliefs and opinions differ to his. Because, in his mind, their lack of urgency could potentially cause deaths decades or even centuries later. Because, until proven wrong beyond any doubt, his theory is paramount, while the theory of those who disagree should be squelch and silenced forever, with their murderers becoming heroes among global warming alarmists.

Southern by choice22 on December 25, 2012 at 2:46 PM

The California Air Resources Board — CARB, get it?

Uhm … Canary for America Really Burning?

ShainS on December 25, 2012 at 2:52 PM

Southern by choice22 on December 25, 2012 at 2:46 PM

Wow, no depth of satire can hold a candle to these loons … Jonah Goldberg really nailed it with his two-word book title: Liberal Fascism.

ShainS on December 25, 2012 at 2:55 PM

It sounds like if you pay a big enough bribe to the government, you can exceed the limits. Very liberal/progressive thinking.

DAT60A3 on December 25, 2012 at 2:59 PM

The state government sold $233 million in permits to pollute at that auction

Selling indulgences didn’t work out so well for the Catholic Church. May it have the same effect here.

Odysseus on December 25, 2012 at 3:16 PM

Making food more expensive is Good For You.

Greg Toombs on December 25, 2012 at 3:40 PM

California is set to implement a cap-and-trade system in 2013—the fruition of AB 32, the Global Warming Solutions Act

We’ve started calling it the Global Warming Final Solutions Act.

Mark1971 on December 25, 2012 at 3:53 PM

Exit question (Allahpundit™): Guess who Morning Star says is going to be paying the extra costs in ketchup and tomatoes?

They think the people in the other 56 states will be paying for their carbon credits because the cost will be driven onto their customers – you know, typical librul/marxists trying to spend other peoples money.

However, these bureaucrats don’t even imagine that tomatos can be grown elsewhere, and better ones at that. I grow more than I can use every year. We try to give them away to all our friends. The only thing more prolific is zucchini and nobody wants that.

Old Country Boy on December 25, 2012 at 4:10 PM

Otisburg?!?!

Jgriff on December 25, 2012 at 4:45 PM

Ah, but the little noted item here is that California got $233 million in something it didn’t have to call a tax, to put into their coffers to blow on public employee pensions or something. I’ve always believed it’s about the money with these legislators and the bet is people will pay, rather than move out. If they’re correct, watch this wave sweep the country because states are always looking for revenue and this one is great because it’s NOT a tax (wink, wink).

bflat879 on December 25, 2012 at 4:53 PM

Arizona will welcome a ketchup plant or four.

pat on December 25, 2012 at 5:05 PM

It’s not about pollution. It’s not even about the money. It’s about power. Specifically, the power to get your name in the record books.
In a world that no longer believes in an afterlife, getting your name in the history books is about as close to immortality as it gets.

Lew on December 25, 2012 at 6:08 PM

This professor is proposing the death penalty for people who simply deny global warming. Because their beliefs and opinions differ to his. Because, in his mind, their lack of urgency could potentially cause deaths decades or even centuries later. Because, until proven wrong beyond any doubt, his theory is paramount, while the theory of those who disagree should be squelch and silenced forever, with their murderers becoming heroes among global warming alarmists.

Southern by choice22 on December 25, 2012 at 2:46 PM

When the time comes (and it is), this guy will make an excellent muslim.

trigon on December 25, 2012 at 6:11 PM

If you thought you saw job loss and migration out of here (in CA) before, just wait…

The house of CArds gets one day closer to collapse…

Khun Joe on December 25, 2012 at 6:22 PM

If you thought you saw job loss and migration out of here (in CA) before, just wait…

The house of CArds gets one day closer to collapse…

Khun Joe on December 25, 2012 at 6:22 PM

Real estate market here in Las Vegas is booming right now, not only residential, but commercial as well. And yes, its CA that is driving it for the most part. I was asking why is Caesars building a brand new huge mall across the street from them, now it is clear they knew their investment will pay off ($750M by latest count).

Too bad that same idiots who ruined CA for themselves will now ruin yet another state.

riddick on December 25, 2012 at 6:45 PM

If you thought you saw job loss and migration out of here (in CA) before, just wait…

The house of CArds gets one day closer to collapse…

Khun Joe on December 25, 2012 at 6:22 PM

Yep.

That and — now that the Dems control a super-majority of the State Legislature along with the non-Governorship — a likely repeal of Proposition 13, which will scatter homeowners quicker than zombies.

The wife and I are actively researching other states in preparation for a move out of here, perhaps within the next year; she’s built — and continues adding to/enhancing:

(1) a database of various factors one can filter on based on criteria important to them; and

(2) a web app/page to access and filter that data, by state and even county, at http://www.leavingcalifornia.net (where, despite its name, anyone considering a move from/to any state/county can potentially benefit from its use.

ShainS on December 25, 2012 at 6:47 PM

The California Air Resources Board— CARB, get it?—[...]

I’m on a low CARB diet — I left California many years ago.

nerdbert on December 25, 2012 at 7:12 PM

In a world that no longer believes in an afterlife, getting your name in the history books is about as close to immortality as it gets.

Lew on December 25, 2012 at 6:08 PM

Right up until the time that the Ministry of Truth (MiniTru) edits you out as…inconvenient.

Solaratov on December 25, 2012 at 8:04 PM

The Democrats know instinctively that if you don’t like something, tax it and you’ll get less of it. What they don’t realize, or don’t care to realize, is that the cap-and-trade program is also a on job creators. So, it may work–less jobs, less carbon, fewer people, taxes, and apparently dwindling common sense.

STL_Vet on December 25, 2012 at 9:01 PM

ShainS on December 25, 2012 at 6:47 PM

Thank you for the link…..we are a few years behind you leaving this crazy state. We are actually going on a holiday tomorrow to look at Arizona :) I just hope we are able to sell our home before the economy in the state crashes and burns.

DanvilleMom on December 25, 2012 at 10:31 PM

Between carbon credits and VAT, the EU is a bunch of dead men walking.

Here in Australia, the red-headed bogan (think redneck, but with an Aussie twist) Julia Gillard is flogging that chicken of “a price on carbon” even as she touts just how many people will get money out of it, the same as does California. Meanwhile the resources boom is now over (thanks, China, for all those ghost cities you built) and the Australian economy is in the crapper.

Global Warming Climate Change is nothing more than the perfection of the Leftist religious non-religion, where Man is his own God, Man screws up, and Man (of the elite class, of course) must fix the screwup. Pay up, plebes!

We have come from the early 1960′s, when people embraced development and the growth of technology as a friend, to fifty years later, where people shy away from the growth of technology and huddle in caves against it. What a colossal waste.

Wanderlust on December 25, 2012 at 11:02 PM

Heard this story from a nuclear engineer for an unnamed utility.
It seems that had it not been for two nuclear power plants in New Jersey, all of New York City would have been dark during Sandy.

J_Crater on December 25, 2012 at 11:31 PM

Destruction testing.

David Blue on December 26, 2012 at 4:07 AM

Dear California Industries:

Welcome Home!

Love and Kisses,
Arizona

orangemtl on December 26, 2012 at 11:29 AM

it may now struggle to compete with foreign producers

So thanks to the carbon tax tomato products will now be imported form overseas with all the added carbon emissions that entails.

Nice job environmentalists.

agmartin on December 26, 2012 at 11:45 AM