Russ Steele
KQED is reporting here.
California’s cap-and-trade program took another baby step toward fruition on Monday, with the release of the state-appointed Economic and Allocation Advisory Committee’s final report on implementing carbon regulation.
Stopping just short of recommending a 100% auction of emission credits, the report, which is non-binding and was written to help the California Air Resources Board develop an economically sound cap-and-trade program, advises the state to sell off the majority of its carbon permits to emitters — with a few exceptions. Industries that “rely heavily” on carbon-based energy or compete directly with firms that do not face carbon regulation, the report says, should be “provided with assistance” or given funds earned from the auction.
The report pointedly advises against handing out free permits to utilities. Although the state’s utilities will almost certainly pass increased costs onto customers, the committee predicts that the price spike will provide an incentive for Californians to start saving energy. The committee’s press release says the report takes a “household friendly” approach to cap-and-trade, recommending that at least 75% of the proceeds from selling carbon permits be returned to households through either tax cuts or direct financial transfers.
Even before the report was released on Monday, the looming possibility of a carbon permit auction was causing anxiety in industrial circles. The AB-32 Implementation Group, an organization that aims to protect California business interests, claimed last week that if the price of carbon is set to $60 per ton, “large employers could be subject to an ‘Auction Tax’ of up to $143 billion by 2020.” Environmental groups have been urging the Air Board to auction off all the carbon permits initially offered.
My first question is how will California avoid this:
“Last month, the European police agency Europol reported that the European Union’s Emissions Trading Scheme (EU ETS) had fallen victim to fraudulent trading activities over the past 18 months, worth €5 billion for several national tax revenues.
It estimates that in some countries, up to 90% of the whole market volume was caused by fraudulent activities.”
My second questions is:
How can California sell carbon at $60.00 per ton, when it is trading at 10 cents a ton on the Chicago Carbon Exchange? Does this make good economic sense?
More details at Watts Up with That
