CA CAP&TRADE AUCTION TO START SMALL

Schwarzenegger Urges ‘Very Small’ Carbon Auctions
Simon Lomax (w/Joe Link and Richard Stubbe), March 25, 2010 (Bloomberg News via BusinessWeek)

"California’s planned cap-and-trade program for greenhouse gases shouldn’t make industrial companies buy large numbers of pollution allowances at auction when it starts in 2012, Governor Arnold Schwarzenegger said…

"California’s 2006 global warming law aims to cut the state’s greenhouse gases to their 1990 level by 2020. The law authorized the air resources board to develop regulations, including a cap-and-trade program…If all the allowances are auctioned instead of given away at the beginning of the cap-and-trade program…[the transition could be too costly for] power plants, oil refineries and factories…"

click to enlarge

"Carbon allowances sold for $20 to $60 each would be worth $2.51 billion to $7.53 billion in 2012 and $7.3 billion to $21.9 billion in 2020, the panel, called the Economic and Allocation Advisory Committee, said…[Much] of the revenue should be used for rebates or tax breaks for California households, the panel said. Making polluters pay for most, if not all, the emission rights they need is better…

"Environmental groups in California support auctioning all the cap-and-trade program’s allowances. Companies to be regulated under the California cap-and-trade program, including oil refiners BP Plc and Chevron Corp., oppose the auction plan, which they say will drive up their costs and give interstate and international competitors an edge."

click to enlarge

"The air resources board, which will write the rules of the state’s cap-and-trade program, should use…[free] allowances to reward companies that have already cut their emissions [but not penalize California business]…

"To further limit the cost of the state’s global-warming program, regulators should give companies access to [offsets similar to those used in Europe’s Cap&Trade system]…Offsets are pollution-cutting projects from unregulated sources, such as farms and forests, which power plants, oil refineries and factories covered by a cap-and-trade program can buy instead of cutting back their own emissions…"