THE ISSUE: A Superior Court judge ruled last week that state air regulators must stop carrying out a cap-and-trade plan to reduce greenhouse gas emissions. Judge Ernest Goldsmith's ruling requires the Air Resources Board to examine alternatives to emissions trading to meet targets under a 2006 law, Assembly Bill 32.

Ben Boychuk: Yes - New rules won't fix a misguided law

Californians will rue the day Judge Goldsmith ordered the Air Resources Board to rethink plans for imposing a cap-and-trade scheme on the Golden State.

No, not because cap-and-trade will miraculously clean our air or halt climate change. As the Europeans have discovered, cap-and-trade for carbon is a bureaucracy-bloating boondoggle.

Goldsmith's ruling is dangerous because as bad as cap-and-trade might be, the alternatives sought by the environmentalist opponents of the new system are much worse.

Here's the challenge: AB 32 requires the state to slash greenhouse gas emissions to 1990 levels by 2020, and another 80 percent by 2050 in a vain attempt to manipulate global temperatures. Under cap-and-trade, the state would set limits on emissions and sell licenses to "polluters." If a company emits less pollution than its license allows, it could sell surplus emission credits to other firms.

The problem with such a system, of course, is that it creates an artificial market by placing arbitrary caps on a substance every living thing generates through the vital act of respiration.

For groups espousing the doctrine of "environmental justice," however, cap-and-trade is too market-oriented and not statist enough. In the interest of equity for poor and minority communities, the lawsuit's plaintiffs would much prefer hard pollution caps on just about everything generating economic activity.

Whether California ends up with cap-and-trade, command-and-control, or something else entirely, poor and minority communities will suffer just the same as AB 32 hobbles the state's economic recovery.

A much-hyped "green jobs boom" may or may not materialize. Meanwhile, employers like Delta Construction in Sacramento are struggling to make payroll in a harsh and uncertain regulatory environment. Delta President Skip Brown notes that Goldsmith's ruling didn't touch a host of air board rules that he claims may bankrupt him by the end of the year.

"We're pretty much done under the particulate matter regulations," Brown told me the other day. Those mandates, imposed in addition to AB 32, would force Brown to retrofit or replace all of his diesel-emitting equipment by 2014 at a cost of $5 million. "They've destroyed my ability to finance, operate and bond my business," he says.

And that's the point. CARB may return in nine months with the greatest regulations ever to spring from the bureaucracy's hive mind. But Skip Brown and others just like him will still be out of business and their employees will still be out of work. The only climate that new cap-and-trade rules are likely to change is the state's economic climate – from cool to frigid.

Pia Lopez: No - It's better to improve state's program

Ben seems utterly unconcerned about the problem to be solved.

The most recent report of the National Research Council states an indisputable fact: "The concentrations of several greenhouse gases (including carbon dioxide, methane, nitrous oxide, and other chemicals) have increased markedly since the start of the 20th century due to human activities."

These increases in greenhouse gases absorb infrared energy that would otherwise escape to space, acting to warm the planet.

California's landmark climate change law, AB 32, aims to reduce gases trapping heat in the atmosphere to 1990 levels by 2020, the same goal as the European Union – a 10 percent reduction during this decade.

To reach that goal, we need to aggressively reduce emissions everywhere – from power plants to factories to transportation. And, no, ramping down emissions does not mean, as Ben implies, ramping down economic activity. It does mean ramping up energy efficiency and low-carbon technologies.

To begin, the judge's ruling has no effect on AB 32's low-carbon fuel standards for automobiles or requirements that utilities obtain a third of their energy from renewable sources by 2020. Full-speed ahead on those.

The judge's ruling affects only one component of AB 32, the so-called cap-and-trade program that would allow power plants, industries, and other major producers of greenhouse gases to purchase permits for carbon emissions. Initially the permits would be free, but later available through auction. Companies that reduce emissions below their allotment (the cap) could sell them on the open market (the trade).

The aim is to provide incentives to update capital equipment and accelerate technological innovation. Isn't that a good thing?

The judge's decision calling upon the California Air Resources Board to show its analysis of alternatives to emissions trading should not cause much of a delay in the January 2012 launch. In fact, it should help improve the program design.

California has learned from Europe's experience and is working hard to establish an accurate inventory of emissions. The state's total statewide aggregated greenhouse gas emissions level in 1990 was 427 million metric tons of carbon dioxide equivalent (MMTCO2e). That is the 2020 emissions limit we're aiming toward.

CARB's latest report shows our 2008 level at 478 million, a small decrease since 2007. Cap-and-trade is a key part of getting to the 427 million target.

Under "no action, do nothing," Ben's preferred scenario, however, California's emissions would increase to a projected 596 million in 2020.

Ben is right that cap-and-trade will not "miraculously clean our air or halt climate change." But it will help.

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Ben Boychuk is associate editor of the Manhattan Institute's City Journal, www.city-journal.org/california Pia Lopez is an editorial writer at The Bee.