Auctioning Off Greenhouse Gases: California Initiates "Cap and Trade" Program

California’s groundbreaking cap and trade program began this week with its first carbon allowance auction. The new system, designed to curb the state’s carbon emissions, regulates how much carbon companies can emit and requires them to pay the state extra, through the purchase of allowances, if they produce over their limits.

The cap and trade program is central to the state’s 2006 global warming law, AB32. The new system sets up regular greenhouse gas auctions over the next eight years. According to MSNBC for the first two years large industrial emitters will receive 90 percent of their allowances for free, giving them time to decrease their emission levels through new technologies or other means. The remaining 10 percent are to be auctioned off to the highest bidders.

The California Chamber of Commerce made an eleventh hour protest on Tuesday evening against the program but today’s auction is scheduled to go ahead. The Chamber argued that the program is illegal as it represents a regulatory fee that goes against existing state law. The Chamber does hope, however, that future auctions will be derailed. Allan Zaremberg, the Chamber’s president, said in a statement, “Unless we adopt the most cost-effective way of reducing carbon emissions, other states will not follow us. The current ... proposal is the most costly way to implement AB32, and it will hurt consumers, the job climate, and the ability of businesses to expand here.” 

Stanley Young, a spokesperson for the California Air Resources Board (CARB), which runs the auctions, estimates that Pacific Coast producers will only spend about $60,000 on allowances in the first two years of the new system. Pacific Coast attorney Mona Shulman, however, disputes this figure suggesting it could cost double that amount. The European Union program that California's cap and trade system is modeled on has struggled with a chronic oversupply of carbon allowances and sagging prices since its initial post-inception boom in 2005.

Despite the Chamber of Commerce’s legal attack on the constitutionality of new program, which they insist constitutes an additional tax on companies, CARB spokesman Young is “confident that the cap and trade program will withstand any court challenge.”

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  • Heroic Mulatto||

  • Pro Libertate||

    Sounds like a scam to me. Then again, I'm no climatologist.

  • Brett L||

    The new system sets up regular greenhouse gas auctions over the next eight years. According to MSNBC for the first two years large industrial emitters will receive 90 percent of their allowances for free, giving them time to decrease their emission levels through new technologies or other means. The remaining 10 percent are to be auctioned off to the highest bidders.

    So just to clarify, the little guys get fucked out of business over two years, and then this sudden glut of credits drives the market price to collapse. Just like the Euros did.

  • Pro Libertate||

    Strange how everything government touches seems to favor the entrenched at the expense of the new and small, while also creating barriers to entry. Wonder why that is?

    It's not just government spending that's blasting away the foundations of our economy.

  • sarcasmic||

    It is because of shit like this that I don't think the economy will ever recover.
    Everything is so damn regulated now that no amount of tax cuts or spending cuts will help.

    Get used to the new normal.

  • Belgian||

    If they cut spending, they won't be able to afford shit like this.

  • ||

    Remember, ProL, it doesn't matter what actually happens, what only matters is what you say you're trying to do, no matter how much you're blatantly lying.

  • Pro Libertate||

    What we need is a time traveler to come here and tell us all how fucked up we really are.

  • ||

    Doc Brown already came back for Marty in the second movie, ProL, and did that. No one listened.

  • Pro Libertate||

    Where is John DeLorean when we need him?

  • Bardas Phocas||

    I've always liked this from way back in the 80s.
    http://www.youtube.com/watch?v=AiBCRQL58_k

    2 trillion dollars? We laugh at that.

  • Brett L||

    I'm beginning to develop a theory that at a certain point, regulatory capture becomes inevitable. I'm still working through whether this is a result of harsher anti-trust enforcement, a regulatory burden tipping point, or the populist revolutions in government reach and expectations brought on by the 16th-19th amendments.

  • Pro Libertate||

    As long as the government has largess to dispense and massive regulatory authority, there's no way this doesn't happen.

  • R C Dean||

    I'm beginning to develop a theory that at a certain point, regulatory capture becomes inevitable.

    I can help.

    Regulatory capture becomes inevitable when regulation is first proposed, because the money, expertise, and motivation to capture the regulation and the agency belong to the big industry players.

  • tarran||

    And we laugh at the people living in 1000 AD who gave away or destroyed their property because Jesus was coming, and the world was about to end.

    What a bunch of rubes!

  • Moogle||

    Everything in California right now can be summed up as:

    "Derp derp derp derp derp derp derp derp derp derp derp derp derp..."

    Related image: A computer synthesized amalgam of California voters.

    http://i0.kym-cdn.com/photos/i.....1305073704

  • Heroic Mulatto||

    Related image: A computer synthesized amalgam of California voters.

    Actually it's closer to this.

  • Loki||

    California voters: like watching a bunch of retards trying to hump a doorknob.

  • sarcasmic||

    I'm sure that California's economy will boom once energy is made more expensive and people have less money to spend on other things!

    Go California!

  • ||

    No, this won't be abused, corrupted, and turned into a way to funnel favors towards crony businesses. Of course not. Never.

  • ||

    "Turned into"???

  • Pro Libertate||

    Yes, I'm having trouble envisioning this scam becomes a scam thing. Isn't it already a scam?

  • ||

    Like when you turn into Grendel. Yeah, you're already a monster, but then you become more of one. Understand now?

  • ||

    Oh, like when your mom changes from a whore into a whore?

  • Tman||

    Here's the best part-

    The state budget this year already siphons off $500 million of the cap-and-trade revenue for such things as "efficient public transportation" and "sustainable infrastructure" that are paid for out of the general fund. Last year Governor Jerry Brown suggested using the gusher to finance his bullet train, which is a mere $50 billion to $90 billion short.

    This assumes the money ever materializes. A study for the California Manufacturers & Technology Association this year estimates the new law will cost state and local governments between $21 billion and $39 billion in revenue due to job losses in the hundreds of thousands and 5.6% slower economic growth by 2020. California has lost about a third of its industrial base over the last decade.

    http://online.wsj.com/article/.....oveLEFTTop

  • Fist of Etiquette||

    Why does California hate its economy?

  • sarcasmic||

    Because a vibrant economy means there are winners and losers, and that just isn't fair.

    It's fairer if everyone loses, then there's no one to envy.

  • Loki||

    THIS IS WHAT PROGRESSO-TARDS ACTUALLY BELIEVE.

  • Loki||

    The current ... proposal is the most costly way to implement AB32, and it will hurt consumers, the job climate, and the ability of businesses to expand here.

    Feature, not bug. /leftist pinko enviro-tard

  • Drake||

    Cap and Trade - more like Pack and Leave.

  • Pagan Priestess||

    Once again we see Californians are bound and determined to turn their whole state into Detroit...for the childrunz.

  • Invisible Finger||

    "Only YOU can prevent economic growth."

  • OldMexican||

    The cap and trade program is central to the state’s 2006 global warming law, AB32. The new system sets up regular greenhouse gas auctions over the next eight years.

    You cynics out there may think that this effort will be for nothing or lead to corruption and mismanagement; but let me tell you, the goal is lofty and too important to ignore or disdain, and that is to depopulate the area and return it to the bears, the buffalo and the dung beetles.

  • Hyperion||

    the bears, the buffalo and the dung beetles

    and a little space left for mega mansions inhabited by carbon credit cronies like Al Gore.

  • Invisible Finger||

    Those sound like three new sets of immigrants.

    Lonewacko must be wetting himself.

  • Hyperion||

    You know, the one thing that stands out to me about dystopian future type novels written by the likes of Rand or Orwell, to name only a couple, is that those authors truly failed in their ability to imagine the amount of completely retarded fubar shit that could actually take place, and is taking place.

  • Invisible Finger||

    Sounds like a state creating its own money to me.

    %#%^#$ Carbon Bugs!!

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